Identify the Type(s) of Gain or Loss That Would Be

question 19

Multiple Choice

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-A business sells a machine used in its business for $18,000. It had purchased the machine 10 months earlier for $26,000. What is the amount and type of the $8,000 loss on the sale of the asset?

• A) Ordinary loss
• B) Section 1231 loss
• C) Section 1245 loss
• D) Capital loss

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Definitions:

Upward Sloping

Describes a line on a graph that shows an increase in a variable as another variable increases.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Equilibrium Quantity

Equilibrium Quantity is the quantity of goods or services that is supplied and demanded at the point where the supply and demand curves intersect, indicating a market balance.

Champagne

A sparkling wine produced from grapes grown in the Champagne region of France under certain regulations.