Norm Acquired Office Equipment for His Business at a Cost

question 76

Multiple Choice

Norm acquired office equipment for his business at a cost of $10,000.After two years of use,Norm exchanges the equipment for different equipment with a fair market value of $7,000.MACRS depreciation on the original equipment was $4,753 The exchange qualifies as a like-kind exchange.Immediately after the exchange Norm sells the new equipment for $7,000 cash.What is the amount and character of the gain recognized?

• A)No gain or loss.
• B)$1,753 Section 1231 gain.
• C)$1,753 Section 1245 ordinary income.
• D)$4,753 Section 1231 gain.
• E)$4,753 section 1245 ordinary income,and $3,000 Section 1231 loss.

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Definitions:

-Tomy

A suffix used in medical terminology to denote the cutting or removal of a part of the body; essentially, it indicates a surgical procedure focused on cutting.

Unilateral

Relating to one side only; often used in medical contexts to describe symptoms or conditions affecting only one side of the body.

Tissue

An ensemble of similar cells and their extracellular matrix from the same origin that together carry out a specific function.

Specialized Functions

Tasks or activities that are particular to a specific organ, system, or profession, requiring specific knowledge or skill.