Alpha Sold Machinery That It Used in Its Business to Beta

question 61

Multiple Choice

Alpha sold machinery that it used in its business to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?

• A)$20,000 ordinary income under §1239.
• B)$10,000 ordinary gain and $10,000 §1231 gain.
• C)$20,000 §1231 gain.
• D)$20,000 capital gain.
• E)None of the choices are correct.

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Definitions:

Sexist Language

Language that discriminates against or stereotypes individuals based on their gender.

Nonsexist Language

Language that treats both sexes neutrally, that does not make assumptions about the proper gender for a job, and that does not imply that one sex is superior to or takes precedence over the other.

Tone

The general character or attitude of a place, piece of writing, situation, etc., often conveying a specific emotion or mood.

Unity

Using only one idea or topic in a paragraph or other piece of writing.