Sumner Sold Equipment That It Uses in Its Business for $30,000

question 54

Multiple Choice

Sumner sold equipment that it uses in its business for $30,000. Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

• A) $10,000 §1231 loss.
• B) $10,000 §1245 loss.
• C) $50,000 ordinary loss.
• D) $10,000 capital loss.
• E) None of these.