In year 0, Longworth Partnership purchased a machine for $40,000 to use in its business. In year

Question:

In year 0, Longworth 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.
a. What is the amount and character of the gain (loss) Longworth will recognize on the sale?
b. What is the amount and character of the gain (loss) Longworth will recognize on the sale if the sale proceeds were increased to $45,000?
c. What is the amount and character of the gain (loss) Longworth will recognize on the sale if the sale proceeds were decreased to $15,000?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...