Question

Required information Problem 3-41 (LO 3-3, LO 3-4) [The following information applies to the questions displayed below.] In year 0, Longworth Partnership purchased a machine for $40,000 to use in its business. In year 3, Longworth sold the machine for $35,000. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $22,000. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Problem 3-41 Part-a a. What is the amount and character of the gain or loss Longworth will recognize on the sale? Amount Description Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) $1231 gain/(loss)

Answer 1

a $ 17,000 ordinary Income Amt in (A) Description a a) Art Realized 35,000 b) riginal Basis 40,000 c) Accumulated sep 2,2,000 d) Adjusted Rolis (6-0) c) Grain, for recognized (a-d). 17000 f) ordinary Income ($ 1245 depreciation 17,000 ( cesser of 38) 18,000 recapture) o to §1231 Grain eo (C-5) Because the entire gain deductions, the entire Income ander § 1245 is caused by depreciation gain is treated as ordinary

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