Quidik Corporation Sold a Machine for $80,000 That It Had

question 13

Multiple Choice

Quidik Corporation sold a machine for $80,000 that it had acquired three years ago for $68,000.If its adjusted basis when sold was $50,000, what should Quidik report on its tax return as a result of this sale?

• A)Section 1245 recapture of $18,000; Section 1231 gain of $30,000;
• B)Ordinary income of $12,000 and Section 1231 gain of $18,000
• C)Section 1245 recapture of $18,000 and Section 1231 gain of $12,000;
• D)Section 1231 gain of $38,000

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Definitions:

Lithosphere

The rigid outer part of the Earth, encompassing the crust and the upper part of the mantle, involved in plate tectonics and continental drift.

Shield Volcanoes

Broad, gently sloping volcanoes formed by the accumulation of highly fluid lava flows, resembling a warrior's shield.

Basaltic Magma

A type of magma that is low in silica and high in iron and magnesium, characteristic of mid-ocean ridges and volcanic islands.

Low Slopes

Areas of land where the gradient or incline is slight, typically leading to the gentle flow of rivers or surface runoff.