The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss?
A) Capital and Ordinary.
B) Ordinary only.
C) Capital and §1231.
D) §1245 and §1231.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

Because the sales price exceeds the original basis, §1245 depreciation recapture and §1231 gain will be recognized.

The Sale of Machinery for More Than the Original Cost