Gary Farmer had the following sales of business property duringthe 2018 tax year:
- Sold land acquired on December 3, 2007, at a cost of $24,000,for $37,000 on January 5, 2018. The cost of selling the land was$500, and there was no depreciation allowable or capitalimprovements made to the asset over the life of the asset.
- Sold a business computer with an adjusted basis of $20,700 thatwas acquired on April 5, 2015. The original cost was $25,875, andaccumulated depreciation was $5,175. The computer was sold on May2, 2018, for $14,000, resulting in a $6,700 loss.
- Sold equipment on July 22, 2018 for gross proceeds of $16,000.The equipment was acquired on October 21, 2017 at a cost of $25,000and accumulated depreciation was $4,300 at the time of the sale.Gary used an equipment broker on this sale and paid a salescommission of $1,600.
Calculate Gary’s net gain or loss and determine the character aseither capital or ordinary (ignore any depreciation recapture).
| Amount of Gain or Loss | Gain or Loss | | Land | $____________ | Gain | | Computer | $___________ | Loss | | Equipment | $____________ | Loss |
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The land and computer are Section 1231 properties,resulting in a net Section 1231 gain of $. This istreated as a net long-term capital gain . Theequipment is treated as an ordinary asset . As such itresults in an ordinary loss of $._______________
