The Chart Below Describes the § 1231 Assets Sold by the Ecru

question 102

Essay

The chart below describes the § 1231 assets sold by the Ecru Company (a sole proprietorship) this year.Compute the gain or loss from each asset disposition and determine the net § 1231 gain treated as long-term capital gain for the year.Assume there is a § 1231 lookback loss of $4,000. Asset Acquired Sold Cost Depreciation Sale Price Stamping machine 3/10/11 8/10/2015 $40,000 $29,736 $32,000 Factory building 2/12/08 7/23/2015 80,000 18,838 90,000 Tractor 5/16/10 11/13/2015 52,000 52,000 30,000 Overhead crane 11/12/04 2/25/2015 74,000 74,000 18,000

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Definitions:

Capital Accounts

Financial records that show the ownership equity in a company, including initial capital contributions, retained earnings, and withdrawals by owners.

Outstanding Liabilities

Financial obligations that a company or individual has not yet settled.

Liquidated Assets

Assets that have been converted into cash or cash equivalents by selling them.

Partnership Liability

The legal obligations that partners in a business partnership are subject to, which can include debts, actions of other partners, and contractual obligations.