Exercise 17-25 (Algorithmic) (LO. 1, 2, 3) Shannon owns two items of business equipment. Both were purchased in 2017 for $222,000, both have a 7-year MACRS recovery period, and both have an adjusted basis of $77,700. Shannon is considering selling these assets in 2021. One of them is worth $133,200, and the other is worth $55,500. Because both items were used in her business, Shannon simply assumes that the loss on one will be offset against the gain from the other and that the net gain or loss will increase or reduce her business income. Which of the following must Shannon determine in order to properly handle this transaction? Select "Yes" if she must determine it; otherwise select "No". a. Whether she plans to purchase any property during the year. b. The outcome of the 1231 netting process. c. Whether the property is a 1231 asset, a capital asset, or an ordinary asset. d. Whether 1245 depreciation recapture will apply. What is the amount and character of Shannon's gain or loss for each asset? Asset 1: Cost, $222,000; adjusted basis, $77,700; sales price, $133,200: Due to 1 The entire applies only when there is a the entire Asset 2: Cost, $222,000; adjusted basis, $77,700; sales price, $55,500: of $ of $ will be treated as on the sale of an asset. will be treated as because 1245 depreciation recapture

Exercise 17-25 (Algorithmic) (LO. 1,2,3) Shannon owns two items of business equipment. Both were purchased in 2017 for $222,000, both have a 7.year MACRS recovery period, and both have an adjusted basis of $77,700. Shannon is considering selling these assets in 2021 . One of them is worth 5133,200 , and the other is worth $55,500. Because both items were used in her busines5; Shannon simply assumes that the loss on one will be offset against the gain from the other and that the net gain or loss will increase or reduce her business income. Which of the following must Shannon determine in order to properly handle this transaction? Select "Yes" if she must determine it; otherwise select "No". What is the amount and character of Shannon's gain or loss for each asset? Asset 1: Cost, $222,000; adfusted basis, $77,700; sales price, $133,200 : Due to , the entire of $ will be treated as Asset 2: Cost, $222,000; adjusted basis, $77,700; sales price, $55,500 : The entire will be treated as because $1245 depreciation recapture applies only when there is a on the sale of an asset