Blue Company Acquires a Used Machine for $45,000 and Uses

question 55

Multiple Choice

Blue Company acquires a used machine for $45,000 and uses it in Blue's manufacturing operations.A few months after Blue places the machine in service,it discovers that the machine is not suitable for Blue's business.Blue had fully expensed the machine in the year of acquisition using § 179.Blue sells the machine for $5,000 in the tax year after it was acquired,but held the machine only for a total of 10 months.What was the tax status of the machine when it was disposed of and the amount of the gain or loss?

• A) A capital asset and $5,000 gain.
• B) An ordinary asset and $5,000 gain.
• C) A § 1231 asset and $5,000 gain.
• D) A § 1231 asset and $5,000 loss.
• E) None of the above.

---

Definitions:

College Diploma

A certificate awarded by a college upon successful completion of a course of study.

Keywords Section

The Keywords section is a part of documents, articles, or web content that lists important words or phrases relevant to the text, serving as a quick-reference tool for the subject matter.

Industry Buzzwords

Specialized jargon and trendy phrases widely used within a specific sector, often to signal insider knowledge or convey complex ideas succinctly.

Gerund

A noun formed from a verb by adding "-ing" that represents an action or a state rather than the doer.