A Business Taxpayer Sold All the Depreciable Assets of the Business,calculated

question 37

Essay

A business taxpayer sold all the depreciable assets of the business,calculated the gains and losses,and would like to know the final character of those gains and losses.The taxpayer had $353,000 of adjusted gross income before considering the gains and losses from sale of the business assets.The taxpayer had unrecaptured § 1231 lookback loss of $12,000.What is the treatment of the gains and losses summarized in the chart below after all possible netting and reclassification has been completed? What is the taxpayer's adjusted gross income? (Ignore the self­employment tax deduction. )
$$\begin{array} { l c c c c } \text { Asset } & \text { Purchase Date } & \text { Sale Date } & \text { Deprecintion } & \text { Cain (Loss) } \\\text { Machine \#1 } & 10 / 10 / 12 & 11 / 1 / 14 & \$ 323,000 & \$ 66,000 \\\text { Machine \#2 } & 10 / 02 / 12 & 11 / 1 / 14 & 65,000 & ( 15,000 ) \\\text { Machine \#3 } & 09 / 23 / 10 & 11 / 1 / 14 & 183,000 & 23,000 \\\text { Machine \#4 } & 09 / 23 / 10 & 11 / 11 / 4 & 28,000 & 64,000\end{array}$$

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Definitions:

FOB Freight-Allowed

A shipping term indicating that the seller pays for the transportation of goods to a specific location, but the buyer assumes the risk of loss once shipped.

Basing-Point Pricing

A pricing strategy where the price of goods includes transportation costs from a specific location, regardless of the actual shipment origin.

Deceptive Pricing

Pricing practices intended to mislead or trick consumers about the actual cost of a product or service.

Federal Trade Commission

A United States government agency aimed at promoting consumer protection and eliminating harmful anti-competitive business practices.