On March 17, a Calendar-Year Taxpayer Sells a Machine Used

question 71

Multiple Choice

On March 17, a calendar-year taxpayer sells a machine used in its business for $9,500.The machine was purchased sixteen months earlier for $9,000 and depreciation deductions of $1,800 have been taken.What is the amount and type of gain recognized on the sale?

• A)$2,300 Section 1231 gain
• B)$2,300 ordinary income
• C)$1,800 Section 1245 recapture; $500 Section 1231 gain
• D)$1,800 Section 1250 recapture; $500 Section 1231 gain

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Definitions:

Complies

To act according to an order, set of rules, or request.

Applicable Law

The body of law or legal system that is relevant or utilized in a particular jurisdiction, case, or legal matter to determine the outcome.

Fraudulent Transfers

The illegal or unethical transfer of property to avoid debts or obligations to creditors.

Voidable Preferences

Financial transactions that can be invalidated or reversed, often within bankruptcy proceedings, if they unfairly favor one creditor over others.