Question

During the current year, Wyatt sells equipment for $150,000. The equipment cost $175,000 when placed in service two years ago, and $55,000 of depreciation deductions were allowed. The results of the sale are:______

Answer 1

Answer:

$30,000

Explanation:

Given that,

Equipment Cost = $175,000

Allowed depreciation = $55,000

Selling price of Equipment = $150,000

Total Value of Assets:

= Equipment Cost - Allowed depreciation

= $175,000 - $55,000

= $120,000

Income from sell of Equipment:

= Selling price of Equipment - Total Value of Assets

= $150,000 - $120,000

= $30,000

So, According to Section 1245 generate ordinary income of $30,000.