Copper Corporation sold machinery for $47,000 on December 31, 2019. The machinery had been purchased on January 2, 2016, for $60,000 and had an adjusted basis of $41,000 at the date of the sale. For 2019, what should Copper report?

A. Ordinary income of $6,000.

B. A § 1231 gain of $3,000 and $3,000 of ordinary income.

C. A § 1231 gain of $6,000.

D. A § 1231 gain of $6,000 and $3,000 of ordinary income.

E. None of these.

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3 March, 13:58

Copper Corporation sold machinery for $47,000 on December 31, 2019. The machinery had been purchased on January 2, 2016, for $60,000 and had an adjusted basis of $41,000 at the date of the sale. For 2019, what should Copper report?

A. Ordinary income of $6,000.

B. A § 1231 gain of $3,000 and $3,000 of ordinary income.

C. A § 1231 gain of $6,000.

D. A § 1231 gain of $6,000 and $3,000 of ordinary income.

E. None of these.

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Answers (1)

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Douglas Wilkins · Answer 1

A. Ordinary income of $6,000

Explanation:

For 2019, copper should report an ordinary income of $ 6000

Purchase price of the machinery was $ 60,000.00

Adjusted basis is the book value which is $ 41,000.00

Sold at $ 47,000.00

Gain or loss = selling price - book value.

= $ 47,000 - $41,000

= $ 6000

The transaction results in a profit of $ 6000