A Business Machine Purchased April 10, 2018, for $62,000 Was

question 28

Essay

A business machine purchased April 10, 2018, for $62,000 was fully depreciated in 2018 using § 179 immediate expensing.On August 15, 2019, the sole proprietor who owned the machine gave it to his son.On that date, the machine's fair market value was $57,000.The son did not use the machine in business or hold it as inventory and sold it on November 22, 2019, for $53,000.What are the amount and nature of the gain or loss from disposition of the machine? Where is it reported in the son's tax return?

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Definitions:

Statement Of Financial Position

Another term for a balance sheet, a financial document that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.

Long-Term Investments

Investments intended to be held for longer than a year, including stocks, bonds, or real estate, aimed at generating long-term returns.

Office Equipment

Office equipment consists of tangible property like desks, computers, and copiers that are used in an office setting for operations and administrative functions.