A business taxpayer trades in a used fully depreciated machine on a replacement machine.Because the machine traded in was worth less than the replacement machine,the taxpayer paid cash in the transaction.Assume the used machine originally cost $100,000,was worth $12,000 when it was traded in,and the replacement machine was worth $20,000.Consequently,the taxpayer paid $12,000 cash in the transaction.Is there recognized gain in this transaction and,if so,what type of gain?

Question

Quizplus · Accepted Answer

The Answer of A business taxpayer trades in a used fully depreciated machine on a replacement machine.Because the machine traded in was worth less than the replacement machine,the taxpayer paid cash in the transaction.Assume the used machine originally cost $100,000,was worth $12,000 when it was traded in,and the replacement machine was worth $20,000.Consequently,the taxpayer paid $12,000 cash in the transaction.Is there recognized gain in this transaction and,if so,what type of gain?

A Business Taxpayer Trades in a Used Fully Depreciated Machine