Alpha Sold Machinery That It Used in Its Business to Beta

question 61

Multiple Choice

Alpha sold machinery that it used in its business to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?

• A)$20,000 ordinary income under §1239.
• B)$10,000 ordinary gain and $10,000 §1231 gain.
• C)$20,000 §1231 gain.
• D)$20,000 capital gain.
• E)None of the choices are correct.

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Definitions:

Communicable Disease

An infectious disease that can be transmitted from person to person, animal to person, or object to person.

Sexual Misconduct

Behavior that is sexually inappropriate, unethical, or legally forbidden, often involving abuse of power or breach of consent.

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A deliberate action that causes harm or damage to another person.

Economic Interests

Financial stakes or benefits that influence the actions or decisions of individuals or entities.