Alpha Sold Machinery, Which It Used in Its Business, to Beta

question 48

Multiple Choice

Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?

• A) $20,000 ordinary income under §1239.
• B) $10,000 ordinary gain and $10,000 §1231 gain.
• C) $20,000 ordinary gain.
• D) $20,000 capital gain.
• E) None of the choices are correct.

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Definitions:

Nominal Group Technique

A structured method for group brainstorming that encourages contributions from all members and is used to generate and evaluate ideas.

Define the Question

The process of clearly specifying the problem or issue to be addressed, serving as a critical first step in researching or making decisions.

Nominal Group Technique

The Nominal Group Technique is a structured method for group brainstorming that encourages contributions from all participants and is used to generate and prioritize ideas.

Equal Participation

A principle ensuring that all members of a group or society have the same opportunities to participate in decision-making processes and activities.