Amelia’s business goes bankrupt this year. To close her business, Amelia starts by selling off her business assets. Below are the asset disposition transactions: Assets Purchased Date Cost Sold date Sold price Delivery car 5/1/23 30k 12/31/23 25k Furniture 3/20/20 40k 12/31/23 20k Equipment 4/1/20 110k 12/31/23 100k Land 1/1/22 150k 12/31/23 180k Assume there is no Section 179 and bonus depreciation. Use MACRS only for depreciation. Show detailed calculation and explanation a) Calculate total accumulated depreciation of each asset until the sold date (12/31/23). b) Calculate the adjusted basis for each asset c) Calculate the gain/loss for each asset d) Point out the exact character of gain/loss for each asset gain/loss (ex: Ordinary, pure 1231, 1245, 1250, etc.) e) Calculate the Net 1231 Gain/Loss
Amelia’s business goes bankrupt this year. To close her business, Amelia starts by selling off her business
assets. Below are the asset disposition transactions:
Assets Purchased
Date
Cost Sold date Sold price
Delivery car 5/1/23 30k 12/31/23 25k
Furniture 3/20/20 40k 12/31/23 20k
Equipment 4/1/20 110k 12/31/23 100k
Land 1/1/22 150k 12/31/23 180k
Assume there is no Section 179 and bonus
Show detailed calculation and explanation
a) Calculate total
b) Calculate the adjusted basis for each asset
c) Calculate the gain/loss for each asset
d) Point out the exact character of gain/loss for each asset gain/loss (ex: Ordinary, pure 1231, 1245, 1250,
etc.)
e) Calculate the Net 1231 Gain/Loss
Hint: Be aware of 1245 Depreciation recapture and 1231 lookback rules
Hint: Review textbook chapter on this. In the year of disposition, under half-year convention, only ½ of
MACRS normal rate is allowed
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