Question: A business machine valued at $800 was contributed to a charitable organization during the year. The machine cost $1,000 but was depreciated down to $600

A business machine valued at $800 was contributed to a charitable organization during the year. The machine cost $1,000 but was depreciated down to $600 before the donation was made. Indicate the correct income tax treatment with respect to the donation.

1) Contribution of $600 (no income recognized)

2) Contribution of $1,000 (income of $200 recognized)

3) Contribution of $800 (income of $200 recognized)

4) Contribution of $800 (no income recognized)

5) None of these

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