Jane operated a restaurant individually. Unfortunately, due to the current situation, he has to sell the restaurant for $5,000,000. He purchased the furniture, fixtures and equipment for $500,000 several years ago and the purchased price was allocated to them. The adjusted basis for these FF&E was $1000,000 and accumulated depreciation was $200,000. What's the effect for this transaction?
Jane operated a restaurant individually. Unfortunately, due to the current situation, he has to sell the restaurant for $5,000,000. He purchased the furniture, fixtures and equipment for $500,000 several years ago and the purchased price was allocated to them. The adjusted basis for these FF&E was $1000,000 and accumulated depreciation was $200,000. What's the effect for this transaction?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 9CE
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Jane operated a restaurant individually. Unfortunately, due to the current situation, he has to sell the restaurant for $5,000,000. He purchased the furniture, fixtures and equipment for $500,000 several years ago and the purchased price was allocated to them. The adjusted basis for these FF&E was $1000,000 and
A.
B. Ordinary income of $500,000
C. Ordinary income of $200,000, and capital gain of $200,000
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