Olive Company Sells Factory Equipment with an Adjusted Basis of $30,000

question 1

Multiple Choice

Olive Company sells factory equipment with an adjusted basis of $30,000 for $33,000. Allowable depreciation of $8,000 had been deducted as of the sale date. What is the amount and character of the gain or (loss) on the sale of the equipment?

• A)$- 0 -
• B)$3,000 Section 1245 ordinary income.
• C)$8,000 Section 1245 ordinary income.
• D)$3,000 long-term capital gain, and $8,000 Section 1245 ordinary income.
• E)$3,000 long-term capital gain.

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