Sumner Sold Equipment That It Uses in Its Business for $30,000

question 41

Multiple Choice

Sumner sold equipment that it uses in its business for $30,000. Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

• A)$10,000 §1231 loss.
• B)$10,000 §1245 loss.
• C)$50,000 ordinary loss.
• D)$10,000 capital loss.
• E)None of the choices are correct.