White Company Acquires a New Machine for $75,000 and Uses

question 21

Multiple Choice

White Company acquires a new machine for $75,000 and uses it in White's manufacturing operations. A few months after White places the machine in service, it discovers that the machine is not suitable for White's business. White had fully expensed the machine in the year of acquisition using § 179. White sells the machine for $60,000 in the tax year after it was acquired, but held the machine only for a total of 10 months. What was the tax status of the machine when it was disposed of and the amount of the gain or loss?

• A) A capital asset and $60,000 gain.
• B) An ordinary asset and $60,000 gain.
• C) A § 1231 asset and $60,000 gain.
• D) A § 1231 asset and $60,000 loss.
• E) None of the above.

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Definitions:

Diversity

The inclusion of individuals representing more than one national origin, color, religion, socioeconomic stratum, sexual orientation, etc.

Clayton Act

A U.S. antitrust law enacted to prohibit certain actions that could lead to anticompetitive practices, thereby enhancing economic fairness and competition.

Sherman Act

A foundational antitrust law in the United States that outlaws monopolistic business practices and promotes competition.

Commodities

Goods or services that are traded, often in bulk, on a financial market.