Martone Corporation sells two machines and a warehouse it has been using for storage in the current tax year. Each of the machines cost $25,000 and has an adjusted basis of $11,000 when each was sold for $14,000. The warehouse cost $105,000, has an adjusted basis of $60,000 and is sold for $95,000. All assets were depreciated using MACRS depreciation. What is the amount and type of gain recognized by Martone on the sale of these assets?

Question

Quizplus · Accepted Answer

($14,000 - $11,000) x 2 = $6,000 Sec. 1245 recapture; $95,000 - $60,000 = $35,000 total gain; .20 x $35,000 = $7,000 Sec. 1250 gain (Sec. 291recapture); $35,000 - $7,000 = $28,000 Sec. 1231 gain

Martone Corporation Sells Two Machines and a Warehouse It Has