During the current year,a corporation sells equipment for $300,000.The equipment cost $270,000 when purchased and placed in service two years ago and $60,000 of depreciation deductions were allowed.The results of the sale are
A)ordinary income of $90,000.
B)Sec.1231 gain of $90,000.
C)ordinary income of $60,000 and LTCG of $30,000.
D)ordinary income of $60,000 and Sec.1231 gain of $30,000.

Question

Quizplus · Accepted Answer

The equipment's adjusted basis is $210,000 ($270,000 cost - $60,000 depreciation). The sale price is $300,000, resulting in a gain of $90,000. The $60,000 depreciation is recaptured as ordinary income, and the remaining $30,000 is a Sec. 1231 gain.

During the Current Year,a Corporation Sells Equipment for $300,000