Instructions Thelp Question 9 (or 5 Save & Et Subnt , Time remaining 03439 9 You

Question

Instructions Thelp Question 9 (or 5 Save & Et Subnt , Time remaining 03439 9 You did not receive full credit for this question in a previous i attempte Sumner sold equipment that it uses in its business for $30.900. Sumner bought the equipment a few years ago for $79,550 and has claimed $39,775 of depreciation expense Assuming that this is Sumners only disposition during the year, what is the amount and character of Sumner's gain or loss O None of the choices are correct O $8,875 capital loss ·$48,650 ordinary loss. O $8.875 245 loss. $8 875 $1231 loss MacBook Air 5 8

Explanation / Answer

Initial cost of equipment

$                   79,550

Less: Depreciation

$                   39,775

Ending Book value

$                   39,775

Less: Sales price

$                   30,900

Loss

$                     8,875

There is no depreciation recapture when a section 1231 asset is sold at a loss.

Hence option “$ 8,875 # 1231 loss” is correct answer.

Initial cost of equipment

$                   79,550

Less: Depreciation

$                   39,775

Ending Book value

$                   39,775

Less: Sales price

$                   30,900

Loss

$                     8,875

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