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On December 1, 2019, Lavender Manufacturing Company (a corporation) purchased another company's assets, including a patent. The patent was used in Lavender's manufacturing operations; $49,500 was allocated to the patent, and it was amortized at the rate of $275 per month. On July 30, 2021, Lavender sold the patent for $95,000. Twenty months of amortization had been taken on the patent. a. What are the amount and nature of the gain Lavender recognizes on the disposition of the patent? Lavender has 5 of due to 1245 recapture and : of 51231 b. Complete the letter to Lavender's controller, Bill Cubit, discussing the treatment of the gain. b. Complete the letter to Lavender's controller, Bill Cubit, discussing the treatment of the gain. SWFT, LLP 5191 Natorp Boulevard Mason, OH 45040 November 23, 2021 Mr. Bill Cubit, Controller Lavender Manufacturing Company 6734 Grover Street Boothbay Harbor, ME 04538 Dear Mr. Cubit: Thank you for the opportunity to respond to your question concerning the tax treatment of the from the disposition of the patent. As you know, amortization of $275 per month has been taken on this patent since it was acquired on December 1, 2019. That amortization totaled $ when thou disposed of the patent on July 30,2021 . This amount is taxable as because it is recaptured by The balance of the \$ 1231, and it will be taxed as , as no other business property dispositions have occurred this year. If you have any questions concerning this transaction or other tax matters, please feel free to contact me. Sincerely, Rose Goodwin, CPA