Butte Sold a Machine to a Machine Dealer for $50,000

question 55

Multiple Choice

Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

• A)$7,500 §1231 loss.
• B)$5,000 §1231 loss.
• C)$7,500 ordinary gain.
• D)$7,500 capital gain.
• E)None of the choices are correct.