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

question 5

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.
-Lopez Corporation sold equipment that is had purchased for $300,000 ($100,000 cash and a note for $200,000) four years ago.. As of the date of sale, Lopez had claimed $187,500 in accumulated depreciation on this equipment and had made $50,000 in principal payments on the note. Lopez received $80,000 cash and a note for $100,000 in addition to the purchaser assuming Lopez's $150,000 note on the equipment. What is Lopez Corporation's realized gain on the sale?

• A) $217,500
• B) $187,500
• C) $112,500
• D) $67,500

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Definitions:

Plymouth Colony

An early settlement established in 1620 by English Puritans in present-day Massachusetts, known for the celebrated Thanksgiving feast.

Mayflower Compact

An agreement reached by the Pilgrims on the Mayflower in 1620, establishing self-governance in Plymouth Colony.

Civil Government

The branch of government concerned with the administration of the state, including the implementation and enforcement of laws and the management of public affairs.

Literacy

The ability to read and write, often considered a fundamental skill for accessing education and participating fully in society.