1- Lena is a sole proprietor. In April of this year, she sold equipment purchase
ID: 2497138 • Letter: 1
Question
1- Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $26,000 with an adjusted basis of $15,500 for $17,000. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $8,200 for $5,500. What are the tax consequences of these tax transactions?
Lena has Selecta:
(capital gain, a capital loss, an ordinary gain, an ordinary loss) of $_______ from the sale of the first equipment.
Lena has Selecta:
(§ 1231 gain, a § 1231 loss) of $_________ from the sale of the second equipment.
2- Jacob purchased business equipment for $56,000 in 2012 and has taken $35,000 of regular MACRS depreciation. Jacob sells the equipment in 2015 for $26,000. What is the amount and character of Jacob’s gain or loss?
If an amount is zero, enter "0".
Jacob has § 1245 gain of $__________ and § 1231 gain of $___________
3- Renata Corporation purchased equipment in 2013 for $180,000 and has taken $83,000 of regular MACRS depreciation. Renata Corporation sells the equipment in 2015 for $110,000. What is the amount and character of Renata’s gain or loss?
Renata Corporation has a Select: (§ 1245 gain, § 1231 gain, § 1245 loss, § 1231) loss of
$________ .
Explanation / Answer
1)
Lena has ordinary gain, of (17000-15500) = $ 1500 from the sale of the first equipment.
Lena has a § 1231 loss = (8200-5500) = $ 1700 from the sale of the second equipment
2)
Jacob has § 1245 gain of $ 0
§ 1231 gain of = (26000 - (56000-35000)
§ 1231 gain of = $ 5000
3)
Renata Corporation has a § 1231 gain of = (110000 - (180000-83000))
Renata Corporation has a § 1231 gain of = $ 13000
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