Gupta Company made the following sales of capital assets this year. $\begin{array}{llr}
&\text { Tax Basis}&\text { Sale Price }\
\text { Asset 1 } &\$60,000&\$47,800\
\text { Asset 2} &112,500&116,000\
\text { Asset 3 } &13,000&22,400
\end{array}$
What is the effect of the three sales on Gupta's taxable income?

Question

Gupta Company made the following sales of capital assets this year. $\begin{array}{llr}
&\text { Tax Basis}&\text {  Sale Price }\
  \text { Asset 1 } &\$60,000&\$47,800\
 \text {  Asset 2} &112,500&116,000\
 \text { Asset 3 } &13,000&22,400
\end{array}$
 What is the effect of the three sales on Gupta's taxable income?

Quizplus · Accepted Answer

The sale of Asset 1 resulted in a $12,200 loss ($60,000 - $47,800), the sale of Asset 2 resulted in a $3,500 gain ($116,000 - $112,500), and the sale of Asset 3 resulted in a $9,400 gain ($22,400 - $13,000). The net effect of the three sales is a $700 increase in taxable income ($12,200 loss + $3,500 gain + $9,400 gain = $700 increase).

Gupta Company Made the Following Sales of Capital Assets This