Sumner sold equipment that it uses in its business for $30,200. Sumner bought the equipment a few years ago for $79,900 and has claimed $39,950 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?
A)$9,750 §1231 loss.
B)$9,750 §1245 loss.
C)$49,700 ordinary loss.
D)$9,750 capital loss.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

The equipment is a §1231 asset. The gain is computed as follows:Amount realized $30,200Less: Adjusted basis [79,900 - 39,950] 39,950Loss $ (9,750)

Sumner Sold Equipment That It Uses in Its Business for $30,200