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  3. a) walt placed in service $25,000 of business equi

A) Walt placed in service $25,000 of business equipment (5-year property) in 2018 and elected...

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Accounting

A) Walt placed in service $25,000 of business equipment (5-year property) in 2018 and elected to expense the entire amount under Sec. 179. In 2019 the equipment is converted to nonbusiness use. What amount of ordinary income must Walt recognize in 2019?

1. $ 5,000

2. $25,000

3. None of the answers provided is correct.

4. $20,000

5. $ 0

B) Gary sold a building (adjusted basis $600,000; accumulated depreciation $220,000) and land (adjusted basis $100,000) (both purchased in 2008) to a corporation in which he was a 75% shareholder. The selling price was $900,000, allocated 20% to the land and 80% to the building. What is the amount of ordinary income/Sec. 1231 gain, respectively, recognized on the sale?

1. $ 0/$200,000

2. $120,000/$ 80,000

3. None of the answers provided is correct.

4. $200,000/$ 0

5. $ 80,000/$120,000

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