Umair sold some equipment he used in his business on August 29, 2015, that was originally purchased

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Umair sold some equipment he used in his business on August 29, 2015, that was originally purchased for $70,000 on November 21, 2014. The equipment was depreciated using the 7-year MACRS method for a total of $18,574. Assume there is no additional netting of gains and losses for this taxpayer.

a. Assume Umair sold the equipment for $50,000:

(1) What is the amount of realized gain or loss on the sale of the equipment?

(2) Is the nature of the gain or loss considered ordinary or long-term?

b. Assume Umair sold the equipment for $60,000:

(1) What is the amount of realized gain or loss on the sale of the equipment?

(2) Is the nature of the gain or loss considered ordinary or long-term?

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Fundamentals Of Taxation 2016

ISBN: 9781259812774

9th Edition

Authors: Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast, Dan Schisler, Jinhee Trone

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