FRANK PURCHASED EQUIPMENT FOR $50,000 ON MARCH 1, 2014. AS OF TODAY, FRANK HAS TAKEN $20,000 OF DEPRECIATION DEDUCTIONS ON THE EQUIPMENT. DUE TO CURRENT MARKET CONDITIONS, FRANK DECIDES TO SELL THE EQUIPMENT BECAUSE HE CAN SELL IT NOW FOR $60,000. HOW MUCH AND WHAT TYPE OF GAIN DOES FRANK RECOGNIZE WHEN HE SELLS THE EQUIPMENT NOW? A. $30,000 ORDINARY INCOME. B. $30,000 LONG-TERM CAPITAL GAIN. C. $20,000 LONG-TERM CAPITAL GAIN AND $10,000 ORDINARY INCOME. D. $10,000 LONG-TERM CAPITAL GAIN AND $20,000 ORDINARY INCOME.
FRANK PURCHASED EQUIPMENT FOR $50,000 ON MARCH 1, 2014. AS OF TODAY, FRANK HAS TAKEN $20,000 OF DEPRECIATION DEDUCTIONS ON THE EQUIPMENT. DUE TO CURRENT MARKET CONDITIONS, FRANK DECIDES TO SELL THE EQUIPMENT BECAUSE HE CAN SELL IT NOW FOR $60,000. HOW MUCH AND WHAT TYPE OF GAIN DOES FRANK RECOGNIZE WHEN HE SELLS THE EQUIPMENT NOW? A. $30,000 ORDINARY INCOME. B. $30,000 LONG-TERM CAPITAL GAIN. C. $20,000 LONG-TERM CAPITAL GAIN AND $10,000 ORDINARY INCOME. D. $10,000 LONG-TERM CAPITAL GAIN AND $20,000 ORDINARY INCOME.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 7CE
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Transcribed Image Text:FRANK PURCHASED EQUIPMENT FOR $50,000 ON MARCH 1, 2014. AS OF TODAY, FRANK
HAS TAKEN $20,000 OF DEPRECIATION DEDUCTIONS ON THE EQUIPMENT. DUE TO
CURRENT MARKET CONDITIONS, FRANK DECIDES TO SELL THE EQUIPMENT BECAUSE HE
CAN SELL IT NOW FOR $60,000.
HOW MUCH AND WHAT TYPE OF GAIN DOES FRANK RECOGNIZE WHEN HE SELLS THE
EQUIPMENT NOW?
A. $30,000 ORDINARY INCOME.
B. $30,000 LONG-TERM CAPITAL GAIN.
C. $20,000 LONG-TERM CAPITAL GAIN AND $10,000 ORDINARY INCOME.
D. $10,000 LONG-TERM CAPITAL GAIN AND $20,000 ORDINARY INCOME.
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