Two Months Ago, Dawes Inc

question 81

Multiple Choice

Two months ago, Dawes Inc. broke a multi-year lease on office space that it had occupied for four years. Three years ago, Dawes paid $85,300 to install carpeting and new electrical fixtures throughout the office. Accumulated depreciation through the date that Dawes vacated the office was $51,000. What is the tax consequence of Dawes' abandonment of the carpeting and fixtures?

• A) Dawes has no tax consequence because it did not sell or exchange these assets.
• B) $34,300 capital loss.
• C) $34,300 ordinary loss.
• D) $34,300 Section 1231 loss.

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Definitions:

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