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On May 8, 2008 Tec Manufacturing purchases $300,000 of five-year equipment and elected to expense $100,000 under Sec. In 2009 Tec sells the equipment...
On May 8, 2008 Tec Manufacturing purchases $300,000 of five-year equipment and elected toexpense $100,000 under Sec. 179. In 2009 Tec sells the equipment for $250,000. MACRSdepreciation deductions for 2008 and 2009 total $72,000, excluding the Sec. 179 deduction. Whatis the amount and character of Tec's gain?A) $100,000 Sec. 1231 gain and $22,000 of Sec. 1245 gainB) $22,000 Sec. 1245 gainC) $122,000 Sec. 1245 gainD) $50,000 Sec. 1231 lossHarry Owns equipment($50,000 basis and $38,000 FMV) and a building ($140,000 basis and $156,000 FMV), which are used in his business, Harry uses straight-line depreciation for both assets, which acquired several years ago. Both the equipment and the building are destroyed in fire, and Harry collects insurance proceeds equal to the assets' FMV. The tax result to Harry for this transaction is a. The involuntary conversions are treated as ordinary gain and losses.b. The involuntary conversions are treated as Sec. 1231 gains and losses.c. The loss on involuntary conversion is treated as sec. 1231 loss while the gain is treated as an ordinary gain
