Winchester LLC Sold the Following Business Assets During the Current

question 60

Multiple Choice

Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, $20,000 proceeds; (2) machinery, $25,000 cost basis, $20,000 depreciation, $10,000 proceeds; (3) furniture, $15,000 cost basis, $10,000 depreciation, $4,000 proceeds; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, $10,000 proceeds; (5) Winchester had unrecaptured §1231 losses of $3,000 in the prior five years. What are the amount and character of Winchester's gains and losses before the §1231 netting process? Assume all assets were held for more than one year.

• A)$3,000 ordinary loss, $0 §1231 loss.
• B)$7,000 ordinary gain, $10,000 §1231 loss.
• C)$7,000 ordinary loss, $4,000 §1231 gain.
• D)$1,000 ordinary gain, $4,000 §1231 loss.
• E)None of the choices are correct.

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Definitions:

Plasma Membrane

The lipid bilayer that surrounds a cell, controlling the movement of substances in and out of the cell.

Cytoplasm

The gel-like substance inside the cell membrane excluding the nucleus, containing organelles and is the site of most cellular activities.

Chromosomes

Structures within cells that consist of DNA and protein and contain the genes.

Metaphase

A stage of cell division in which chromosomes align in the middle of the cell before being separated into each of the two daughter cells.