Homework Answers
1. Adjusted tax basis is 60000-40000=20000
Gain is sale price minus adjusted tax basis= 57000-20000=37000
So 20000 is taxed as ordinary income under section 1245 and 37000 as capital gain under section 1231
2. Since sale price is 16000
16000-20000=4000 loss is ordinary under section 1231
3. Since sales price is 65000 which is more than the purchase price
65000-20000=45000
The first 20000 is taxed as unrecaptured 1250 gain and 45000 as capital gains
4. Unrecaptured net section 1231 loss can be set off from capital gains.
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