Which of the Following Creates Potential § 1245 Depreciation Recapture

question 56

Multiple Choice

Which of the following creates potential § 1245 depreciation recapture and potential § 1231 gain?

• A) Depreciable office furniture held more than one year and sold for more than its original cost.
• B) Amortizable goodwill held more than one year and disposed of for less than its adjusted basis.
• C) Land held more than one year and sold for more than was paid for it.
• D) A note receivable held more than one year and sold for less than was paid for it.
• E) None of the above.

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Definitions:

Reimbursement

The act of compensating someone for an expense or loss incurred.

Legal Liability

The legal responsibility to compensate for harm or damage caused by one's actions or failure to act.

Independent Contractor

A person who provides services to another entity under terms specified in a contract, but is not considered an employee of the company.

Office Equipment

Tangible property like desks, chairs, computers, and printers used in an office setting to facilitate work and operations.