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****** Scenario 4: Depreciation Recapture: The Nitty-Gritty Sole proprietor sells...

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Accounting

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Scenario 4: Depreciation Recapture: The Nitty-Gritty
Sole proprietor sells several items of business equipment, each with these details:
Item A: Orig. Cost $20,000, Accum. Deprec. $18,000, Sold for: $5,000
Item B: Orig. Cost $50,000, Accum. Deprec. $60,000, Sold for: $12,000
Item C: Orig Cost $35,000, Accum. Deprec. $22,000, Sold for: $8,000
Net Business Income (excluding these sales): $80,000
Interest and Dividend Income: $600
Itemized Deductions: $14,000
Allowable deduction for self-employment tax: $6,500
Calculate:
The type of gain/loss (ordinary, capital, Sec. 1231) and amount for each item.
AGI, Taxable Income, and Total Tax Liability

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