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A business machine, which cost $10,000 two years ago, was sold on January 1, this...

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Accounting

A business machine, which cost $10,000 two years ago, was sold on January 1, this year, for $19,000. Depreciation was as follows for the calendar-year taxpayer:

Actual Depreciation Straight-line Would

Allowed and Allowable Have Been

Two years ago $1,429 $1,000

Last year 2,449 2,000

This year 875 500

$4,753 $3,500

The adjusted basis of the property sold is:

a.

$5,247
b.

$6,500
c.

$10,000
d.

None of the above

The gain realized and recognized on the sale is:

a.

$9,000
b.

$12,500
c.

$13,753.

d.

$19,000
e.

None of the above

The character or nature of the gain realized and recognized is:

a.

All ordinary income
b.

All capital gain
c.

$4,753 ordinary income, $9,000 1231 capital gain
d.

$3,500 ordinary income, $9,000 1231 capital gain
e.

None of the above

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