Your grandfather, an engineer, just gifted you furniture from his office after retiring and closing his business. He originally paid $5,000 for the furniture and it was depreciated $3,000 in his business before he gave it to you. The furniture is no longer manufactured and is in demand and so, after using it for three years, you sell it for $7,000. How much of the gain will be taxed as ordinary income? 

$2,000  

$0 

$3,000 

$5,000

Answer rating: 100% (QA)

To calculate the gain that will be taxed as ordinary ... View the full answer