Chapter 8, Problem 14MCQ

In 2019, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1,2017, at a cost of $22,000. Mary has deducted depreciation on the machine of $6,000. What is the amount and nature of Mary's gain as a result of the sale of the machine?

1. $2,000 Section 1231 gain
2. $8,000 ordinary income under Section 1245
3. $6,000 ordinary income and $2,000 Section 1231 gain
4. $6,000 Section 1231 gain and $2,000 ordinary income under Section 1245
5. None of the above