38th Edition

ISBN: 9780357391129

Author: WHITTENBURG

Publisher: Cengage

Concept explainers

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue autho…

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Textbook Question

Chapter 8, Problem 14MCQ

In 2019, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1,2017, at a cost of $22,000. Mary has deducted depreciation on the machine of $6,000. What is the amount and nature of Mary's gain as a result of the sale of the machine?

$2,000 Section 1231 gain
$8,000 ordinary income under Section 1245
$6,000 ordinary income and $2,000 Section 1231 gain
$6,000 Section 1231 gain and $2,000 ordinary income under Section 1245
None of the above

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

Expert Solution & Answer

Chapter 8 Solutions

Income Tax Fundamentals 2020

Ch. 8 - Alice purchases a rental house on August 22,2019,...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - James purchased office equipment for his business....Ch. 8 - Which of the following statements with respect to...Ch. 8 - Which of the following is not true about the MACRS...Ch. 8 - On July 20,2019, Kelli purchases office equipment...Ch. 8 - Which of the following is not considered a limit...Ch. 8 - In 2019, Ben purchases and places in service a new...Ch. 8 - In 2019, Ben purchases and places in service a new...

Ch. 8 - Prob. 11MCQ Ch. 8 - Prob. 12MCQ Ch. 8 - Prob. 13MCQ Ch. 8 - In 2019, Mary sells for $24,000 a machine used in...Ch. 8 - Prob. 15MCQ Ch. 8 - Prob. 16MCQ Ch. 8 - Virginia has business property that is stolen and...Ch. 8 - Pat sells land for $25,000 cash and a $75,000...Ch. 8 - Prob. 19MCQ Ch. 8 - Prob. 20MCQ Ch. 8 - Oscar owns a building that is destroyed in a...Ch. 8 - Prob. 22MCQ Ch. 8 - Prob. 1P Ch. 8 - Prob. 2P Ch. 8 - 3. Mike purchases a new heavy-duty truck (5-year...Ch. 8 - On March 8,2019, Holly purchased a residential...Ch. 8 - Prob. 5P Ch. 8 - Prob. 6P Ch. 8 - Calculate the following: The first year of...Ch. 8 - During 2019, William purchases the following...Ch. 8 - On February 2,2019, Alexandra purchases a personal...Ch. 8 - On September 14,2019, Jay purchased a passenger...Ch. 8 - Tom has a successful business with $100,000 of...Ch. 8 - Prob. 14P Ch. 8 - Annie develops a successful tax practice. She...Ch. 8 - Prob. 18P Ch. 8 - Prob. 19P Ch. 8 - Prob. 20P Ch. 8 - Prob. 21P

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Similar questions

Sissie owns two items of business equipment. Both were purchased in 2015 for 100,000, both have a 7-year MACRS recovery period, and both have an adjusted basis of 37,490. Sissie is considering selling these assets in 2019. One of them is worth 60,000, and the other is worth 23,000. Because both items were used in her business, Sissie 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. What is the amount and character of Sissies gain or loss?
James purchased office equipment for his business. The equipment has a depreciable basis of $7,000 and was put in service on June 1,2019. James decides to elect straightline depreciation under MACRS for the asset over the minimum number of years (7 years), and does not use bonus depreciation or make the election to expense. What is the amount of his depreciation deduction for the equipment for the 2019 tax year? $2,000 $1,000 $500 $0 None of the above

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