Jason sells a piece of equipment for $43,000.The equipment was purchased four years ago for $56,000.It was depreciated using an accelerated method of depreciation.Its adjusted basis at the time of sale is $21,000.Straight-line depreciation would have been only $20,000.What is the amount and type of gain Jordan recognizes on this sale?

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The gain recognized on the sale is $22,000, calculated as the sale price ($43,000) minus the adjusted basis ($21,000). Since the equipment was depreciated using an accelerated method and the depreciation recapture applies to Section 1245 property (tangible personal property), the entire gain is treated as ordinary income under Section 1245.

Jason Sells a Piece of Equipment for $43,000