Glenn sells a piece of equipment used in his business for $31,500.The equipment was purchased on July 1,2014,at a cost of $22,000.Glenn has taken $6,600 of depreciation on the equipment.What are the amount and classification of the gain on the sale by Glenn?

Question

Quizplus · Accepted Answer

The total gain is $9,500 ($31,500 sale price - $22,000 cost + $6,600 depreciation). The $6,600 depreciation is recaptured as ordinary income under Section 1245, and the remaining $9,500 is a Section 1231 gain.

Glenn Sells a Piece of Equipment Used in His Business