The Sale for More Than the Original Cost Basis (Before

question 3

Multiple Choice

The sale for more than the original cost basis (before depreciation) of machinery used in a trade or business and held for more than one year results in which of the following types of gain or loss?

• A)Capital and ordinary.
• B)Ordinary only.
• C)Capital and §1231.
• D)§1245 and §1231.
• E)None of the choices are correct.

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Definitions:

Accounts Payable Period

The average number of days it takes for a business to pay its suppliers and vendors.

Inventory Period

The average time it takes for a company to convert its inventory into sales or the duration of the inventory cycle.

Inventory Period

The average time it takes for a company to turn its inventory into sales, reflecting the efficiency of inventory management.

COGS

Cost of Goods Sold, representing the direct costs attributable to the production of the goods sold by a company.