White Company Acquires a New Machine for $75,000 and Uses

question 21

Multiple Choice

White Company acquires a new machine for $75,000 and uses it in White's manufacturing operations. A few months after White places the machine in service, it discovers that the machine is not suitable for White's business. White had fully expensed the machine in the year of acquisition using § 179. White sells the machine for $60,000 in the tax year after it was acquired, but held the machine only for a total of 10 months. What was the tax status of the machine when it was disposed of and the amount of the gain or loss?

• A) A capital asset and $60,000 gain.
• B) An ordinary asset and $60,000 gain.
• C) A § 1231 asset and $60,000 gain.
• D) A § 1231 asset and $60,000 loss.
• E) None of the above.

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Definitions:

Behavioural Approach

A psychological perspective focusing on observable behaviors and how they're learned through interaction with the environment.

Cognitive Approach

A psychological perspective that emphasizes the importance of internal mental processes in understanding human behavior.

Person-Centred Theory

A psychological approach that emphasizes the importance of the individual's self-concept and the inherent capacity for personal growth and self-healing.

Carl Rogers

An influential American psychologist who founded the humanistic approach to psychology, emphasizing the importance of the self and the individual's capacity for personal growth.