The tax treatment regarding the sale of existing assets that are sold for more than the book value but less than the original purchase price results in a(n) ________.

Question

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When existing assets are sold for more than their book value but less than the original purchase price, the excess over the book value is considered recaptured depreciation and is taxed as ordinary income. This is because depreciation deductions previously reduced ordinary income, and the recapture rules ensure that the tax benefits from those deductions are reversed if the asset is later sold for more than its depreciated value.

The Tax Treatment Regarding the Sale of Existing Assets That