A corporation sells a machine used in its business for 9 years for $22,000.The machine originally cost $120,000 and was fully depreciated.Its gain will be treated as:
A)Capital gain
B)Section 1231 gain
C)Section 1245 recapture
D)Section 1250 recapture

Question

Quizplus · Accepted Answer

Section 1245 recapture applies because the gain on the sale of depreciable personal property (like a machine) is treated as ordinary income to the extent of depreciation taken. Since the machine was fully depreciated, the entire gain is subject to Section 1245 recapture.

A Corporation Sells a Machine Used in Its Business for 9