Mary Martin owns a custom curtain/drapery business. In 2019, she purchased three new sewing machines and in

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Mary Martin owns a custom curtain/drapery business. In 2019, she purchased three new sewing machines and in a separate transaction, sold her three old machines for $6,000. She had bought the old machines for $5,000 and had properly claimed depreciation of $3,000. What is the amount and character of Mary’s gain?

a. $0 ordinary gain and $4,000 Section 1231 gain

b. $2,000 ordinary gain and $4,000 Section 1231 gain

c. $3,000 ordinary gain and $1,000 Section 1231 gain

d. $4,000 ordinary gain and $0 Section 1231 gain

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CCH Federal Taxation Basic Principles 2020

ISBN: 9780808051787

2020 Edition

Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback

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