Milton Inc. recognized a $16,900 gain on sale of depreciable equipment held for three years. If Milton's accumulated MACRS depreciation on the equipment is $16,900 or more, the entire loss will be treated as ordinary as a result of the full recapture rule.

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The full recapture rule states that if the accumulated MACRS depreciation on an asset is equal to or greater than the asset's original cost, then any gain on the sale of the asset will be treated as ordinary income. In this case, Milton's accumulated MACRS depreciation on the equipment is $16,900 or more, which is equal to the gain on the sale of the equipment. Therefore, the entire gain will be treated as ordinary income.