A gain or loss is treated as long-term if the capital asset is held for: one yea
ID: 2726095 • Letter: A
Question
A gain or loss is treated as long-term if the capital asset is held for:
one year or more
more than one year
18 months or more
more than 18 months
Jackson, Inc. sells a piece of machinery for $12,000. The machinery was originally purchased four years ago for $25,000 and the company has claimed depreciation deductions totaling $18,000, making the adjusted basis $7,000 at the time of sale. How much, if any, of the gain is subject to depreciation recapture as Section 1245 gain?
$0
$5,000
$7,000
$12,000
a.one year or more
b.more than one year
c.18 months or more
d.more than 18 months
Jackson, Inc. sells a piece of machinery for $12,000. The machinery was originally purchased four years ago for $25,000 and the company has claimed depreciation deductions totaling $18,000, making the adjusted basis $7,000 at the time of sale. How much, if any, of the gain is subject to depreciation recapture as Section 1245 gain?
a.$0
b.$5,000
c.$7,000
d.$12,000
Explanation / Answer
A gain or loss is treated as long-term if the capital asset is held for: MORE THAN ONE YEAR.
Long-term capital gains or losses, on dispositions of assets held for more than one year, are taxed at a lower rate.
II. The cost of Machinery = $ 25,000
Accumulated Deprecition = $ 18,000
Value of the Machinery = $ 7,000
Sales Price of the Machinery = $ 12,000
Gain on Sale of Machinery = $ 12,000 - $ 7,000 = $ 5,000
The Answer is $ 5,000
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