Melody Works in Her Home

question 28

Multiple Choice

Melody works in her home.She purchased a computer two years ago for $2,500.The total adjusted basis for the computer is now $1,000.Her husband and children used the computer 20 percent of the time to play computer games and for personal correspondence.She sells the computer for $1,200.How much and what kind of gain does Melody recognize?

• A)$200 capital gain
• B)$200 Section 1245 recapture
• C)$200 Section 1231gain
• D)$460 Section 1245 recapture
• E)None of the above

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Definitions:

Automobiles

Automobiles are motor vehicles with wheels designed primarily for the transportation of people rather than goods.

Regression Equation

A mathematical equation that allows prediction of one behavior when the score on another variable is known.

Predict

To declare or indicate a likely occurrence or outcome in the future based on current knowledge or analysis.

Relationship

The way in which two or more concepts, objects, or people are connected, or the state of being connected.