Explain Whether the Saleat a Loss of a Machine Used

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Examlex · Accepted Answer

The Answer is The sale at a loss of a machine used in a trade or business generates an ordinary loss.
A machine is a §1231 asset if used in a trade or business and held for more than one year. The character of a net §1231 loss is ordinary. A gain on the sale of a §1231 asset can generate ordinary income from depreciation recapture or capital gain if the gain exceeds the depreciation taken. If the machine is used in a trade or business and sold for a gain within the first year, the character of the gain is also ordinary.

Explain Whether the Saleat a Loss of a Machine Used

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