Melody Works in Her Home Using a Computer She Purchased

question 27

Multiple Choice

Melody works in her home using a computer she purchased 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

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Definitions:

Smooth Muscle

A type of muscle tissue which is found in the walls of organs, such as the stomach, and is involved in involuntary movements.

Abrasion-Resistant

Refers to materials or surfaces that are designed to withstand wear, scraping, or rubbing that may cause erosion.

Keratin

A type of protein found in skin, hair, and nails, making them strong and resistant to damage.

Excess UV Light

Ultraviolet light that surpasses safe levels, potentially leading to damage such as skin burns, eye injury, or increased risk of skin cancer.