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7. Gibby sold 4-year-old business machinery for $100,000. The machinery had an original cost of $ 80,500. Gibby claimed $ 12,500 in depreciation through the date of sale. The only other § 1231 transactions H has had were in the two prior years. He had a §1231 gain of $3,500 two years ago and a §1231 loss of $12,000 last year. How are Gibby’s gains for the current year treated? a. $12,500 ordinary gain; $19,500 long-term capital gain b. $21,000 ordinary gain; $11,000 long-term capital gain c. $24,500 ordinary gain; $7,500 long-term capital gain d. $32,000 ordinary gain e. $32,000 long term capital gain

7. Gibby sold 4-year-old business machinery for $100,000. The machinery had an original cost of $ 80,500. Gibby claimed $ 12,500 in depreciation through the date of sale. The only other § 1231 transactions H has had were in the two prior years. He had a §1231 gain of $3,500 two years ago and a §1231 loss of $12,000 last year. How are Gibby’s gains for the current year treated? a. $12,500 ordinary gain; $19,500 long-term capital gain b. $21,000 ordinary gain; $11,000 long-term capital gain c. $24,500 ordinary gain; $7,500 long-term capital gain d. $32,000 ordinary gain e. $32,000 long term capital gain

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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7. Gibby sold 4-year-old business machinery for $100,000.
The machinery had an original cost of $ 80,500. Gibby claimed
$ 12,500 in depreciation through the date of sale. The only other
§ 1231 transactions H has had were in the two prior years. He
had a §1231 gain of $3,500 two years ago and a §1231 loss of
$12,000 last year. How are Gibby’s gains for the current year
treated?
a. $12,500 ordinary gain; $19,500 long-term capital gain
b. $21,000 ordinary gain; $11,000 long-term capital gain
c. $24,500 ordinary gain; $7,500 long-term capital gain
d. $32,000 ordinary gain
e. $32,000 long term capital gain

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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