Identify each of White Corporation\'s following assets as an ordinary, capital,
ID: 2359736 • Letter: I
Question
Identify each of White Corporation's following assets as an ordinary, capital, or 1231 asset. A. Two years ago, White used its excess cash to purchase a piece of land as an investment. B. Two year ago, white purchased land and a warehouse. It uses these assets in its business. C. Manufacturing machinery White purchased earlier this year. D. Inventory White purchased 13 months ago but is ready to be shipped to a customer. E. Office equipment White has used in its business for the past three years. F. 1000 shares of stock in Black corporation that White purchased two years ago because it was a good investment. G. Account receivable from a customer with terms 2/10 net 30. H. Machinery White held for three years and then sold at a loss of $10,000Explanation / Answer
a. Capital, because it is held for investment. b. The land and building are both §1231 property because White uses the assets in its trade or business and has held the assets property for more than a year. c. Ordinary, the property is ordinary even though it is used in a trade or business because it has been held for less than one year. Once White has held the machinery for more than a year, it will become §1231 property. d. Ordinary, inventory is held in the ordinary course of business. e. §1231, the property is used in a trade or business and held for more than one year. f. Capital, because it is held for investment. g. Ordinary, accounts receivable are created in the ordinary course of business. h. §1231, the property is used in a trade or business and held for more than one year.