Question

Goyo Industries (a sole proprietorship) sold three § 1231 assets during 2019. Data on these property dispositions are as follows: Asset Cost Acquired Depreciation Sold For Sold On Machine #1 Machine #2 Machine #3 $85,000 $30,000 $77,000 08/31/15 11/17/16 02/28/18 $32,000 $12,000 $28,000 $60,000 $15,000 $51,000 12/04/19 12/04/19 12/04/19 Determine the amount and the character of the recognized gain or loss from the disposition of each asset. If an amount is zero, enter "O". Character of Gain or Loss Total Amount of Gain or Loss Amount of S 1245 Recapture Balance of Gain or Loss Asset Machine #1 Machine #2 Machine #3 Goyo has $ of due to $ 1245 recapture and s of § 1231 Assuming Goyo has no nonrecaptured net 5 1231 losses from prior years, analyze these transactions and determine the amount (if any) that will be treated as a long-term capital gain.

Answer 1

Sola Gain(Loss) Gain or loss on disposal of asset Machine sold for Adjusted basis $60,000 $53,000 $15,000 $18,000 $51,000 $49,000 Nature of gain(Loss) | $7,000 Ordinary gain u/s 1245 ($3,000) loss u/s 1231 $2,000 Ordinary gain u/s 1245 Thus Goyo has $ 9000 of ordinary income under section 1245 and loss of $3000 under section 1231 Solb in the given case of Goyo none of the gains are treated as capital gains since Goyo doesnot have net gain as per section 1231