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A taxpayer purchased used business equipment on November 20, 2016, for $100,000. The equipment was...

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Accounting

A taxpayer purchased used business equipment on November 20, 2016, for $100,000. The equipment was sold for $60,000 on August 25, 2018. Depreciation information is as follows:

Accelerated depreciation taken $47,500
Straight-line depreciation (7-year life) would have been 28,500

How will the gain or loss on the sale of this equipment be treated for tax purposes?

Question 18 options:

1)

$7,500 ordinary income

2)

$7,500 long-term capital gain

3)

$7,500 short-term capital gain

4)

$7,500 Section 1231 gain

5)

None of the above

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