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Joe's Restaurant Inc. purchased an oven for $10,000 and takes $9,000 of depreciation on that oven over three years. Under IRC §1011 the basis of the oven is $1,000. A sells the oven for $20,000 thereby realizing a gain of $19,000. How much of the gain is recaptured as ordinary income, and how much is treated as §1231 gain . a. 9,000 recaptured as ordinary income 10,000 treated as §1231 gain b. 10,000 recaptured as ordinary income 9,000 treated as §1231 gain c. 19,000 recaptured as ordinary income none treated as §1231 gain d. none recaptured as ordinary income 19,000 treated as §1231 gain

Joe's Restaurant Inc. purchased an oven for $10,000 and takes $9,000 of depreciation on that oven over three years. Under IRC §1011 the basis of the oven is $1,000. A sells the oven for $20,000 thereby realizing a gain of $19,000. How much of the gain is recaptured as ordinary income, and how much is treated as §1231 gain . a. 9,000 recaptured as ordinary income 10,000 treated as §1231 gain b. 10,000 recaptured as ordinary income 9,000 treated as §1231 gain c. 19,000 recaptured as ordinary income none treated as §1231 gain d. none recaptured as ordinary income 19,000 treated as §1231 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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Joe's Restaurant Inc. purchased an oven for $10,000 and takes $9,000 of depreciation on that oven over three years. Under IRC §1011 the basis of the oven is $1,000. A sells the oven for $20,000 thereby realizing a gain of $19,000. How much of the gain is recaptured as ordinary income, and how much is treated as §1231 gain .



a. 9,000 recaptured as ordinary income
10,000 treated as §1231 gain

b. 10,000 recaptured as ordinary income
9,000 treated as §1231 gain


c. 19,000 recaptured as ordinary income
none treated as §1231 gain

d. none recaptured as ordinary income
19,000 treated as §1231 gain

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