What is the § 1245 recapture gain amount for Blue Company when they sold machinery for $45,000 that had an adjusted basis of $34,200?

What is the § 1245 recapture gain amount for Blue Company when they sold machinery for $45,000 that had an adjusted basis of $34,200?

• A. $0 § 1231 gain, $10,800 § 1245 recapture gain, $0 § 1231 loss.
• B. $0 § 1231 gain, $0 § 1245 recapture gain, $14,800 § 1231 loss.
• C. $0 § 1231 gain, $34,200 § 1245 recapture gain, $0 § 1231 loss.
• D. $0 § 1231 gain, $10,800 § 1245 recapture gain, $34,200 § 1231 loss.

Answer: (A)

To determine the § 1245 recapture gain for Blue Company, it is essential to analyze the sale of the machinery in the context of tax law related to depreciable property. The initial sale price of the machinery was $45,000, and it had an adjusted basis of $34,200. The recapture rule under § 1245 applies when a taxpayer sells depreciable personal property and realizes a gain. The gain up to the amount of prior depreciation taken is classified as § 1245 recapture gain. In this scenario, the total gain from the sale can be calculated as follows: 1. Sales Price: $45,000 2. Adjusted Basis: $34,200 3. Gain = Sales Price - Adjusted Basis = $45,000 - $34,200 = $10,800 Since the entire gain ($10,800) is less than or equal to the amount depreciated (which is not specified but presumed to be at least $10,800), this entire amount is subject to recapture under § 1245. Thus, Blue Company recognizes a § 1245 recapture gain of $10,800. Furthermore, because the gain realized is the full amount of the rec

To determine the § 1245 recapture gain for Blue Company, it is essential to analyze the sale of the machinery in the context of tax law related to depreciable property. The initial sale price of the machinery was $45,000, and it had an adjusted basis of $34,200.

The recapture rule under § 1245 applies when a taxpayer sells depreciable personal property and realizes a gain. The gain up to the amount of prior depreciation taken is classified as § 1245 recapture gain.

In this scenario, the total gain from the sale can be calculated as follows:

1. Sales Price: $45,000

2. Adjusted Basis: $34,200

3. Gain = Sales Price - Adjusted Basis = $45,000 - $34,200 = $10,800

Since the entire gain ($10,800) is less than or equal to the amount depreciated (which is not specified but presumed to be at least $10,800), this entire amount is subject to recapture under § 1245. Thus, Blue Company recognizes a § 1245 recapture gain of $10,800.

Furthermore, because the gain realized is the full amount of the rec