KTZ manufactures and distributes cutting edge hockey equipment. It has decided to streamline some of its operations so that it will be able to be more productive and efficient. Because of this decision it has entered into several transactions during the year.

Part 1

Determine the gain/loss realized and recognized in the current year for each of these events. Also determine whether the gain/loss recognized is §1231, capital, or ordinary.

Item	Description
Example	KTZ sold a machine with an adjusted basis of $20,000 for $65,000. They had claimed $15,000 of depreciation.
A	KTZ sold an office building for $85,000 in cash. It originally bought the office building seven years ago for $59,000 and has taken $14,000 in depreciation.
B	KTZ sold another machine for $6,200. It originally purchased this machine six months ago for $9,000 and has claimed $1,230 in depreciation expense against the asset.
C	KTZ sold some of its inventory for $5,000 cash. This inventory had a basis of $8,000
D	KTZ held stock in XYZ Corp., which had a value of $19,000 at the beginning of the year. That same stock had a value of $25,230 at the end of the year.
E	KTZ sold a machine that it used to make computerized dies for $26,300 cash. It originally bought the machine for $16,200 three years ago and has taken $4,000 depreciation

Realized Gain/Loss	Recognized Gain/Loss	Character of Gain/Loss
EXAMPLE	$45,000	$45,000	§1245 $15,000 ordinary income
§1231 $30,000
A
B
C
D
E

Part 2

From the recognized gains/losses determined in part 1, determine the net §1231 gain/loss and the net ordinary gain/loss for KTZ.

Net §1231 Gain/Loss

Net Ordinary Inc/Loss

 

Answer rating: 100% (QA)

Part 1 Item A Adjusted basis of the office building 59000 Accumulated depreciation 14000 Selling pri... View the full answer