James sold equipment he purchased eight months earlier for use in his consulting business. His cost and adjusted basis in the equipment is $42,000. He incurred selling expenses of $3,000. The buyer paid $35,000 cash and assumed James's $18,000 loan on the equipment. What is the amount of his gain or loss, and where on Form 4797 will he report the sale? a) $8,000 gain on Part I b) $8,000 gain on Part II c) $8,000 loss on Part I d) $8,000 loss on Part II
James sold equipment he purchased eight months earlier for use in his consulting business. His cost and adjusted basis in the equipment is $42,000. He incurred selling expenses of $3,000. The buyer paid $35,000 cash and assumed James's $18,000 loan on the equipment. What is the amount of his gain or loss, and where on Form 4797 will he report the sale? a) $8,000 gain on Part I b) $8,000 gain on Part II c) $8,000 loss on Part I d) $8,000 loss on Part II
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 32P
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Transcribed Image Text:James sold equipment he purchased eight months earlier for use in his
consulting business. His cost and adjusted basis in the equipment is $42,000.
He incurred selling expenses of $3,000. The buyer paid $35,000 cash and
assumed James's $18,000 loan on the equipment. What is the amount of his
gain or loss, and where on Form 4797 will he report the sale?
a) $8,000 gain on Part I
b) $8,000 gain on Part II
c) $8,000 loss on Part I
d) $8,000 loss on Part II
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