Lopez Corporation Sold Equipment That It Had Purchased for $300,000

Lopez Corporation sold equipment that it had purchased for $300,000 ($100,000 cash and a note for $200,000) four years ago.As of the date of sale, Lopez had claimed $187,500 in accumulated depreciation on this equipment and had made $50,000 in principal payments on the note.Lopez received $80,000 cash and a note for $100,000 in addition to the purchaser assuming Lopez's $150,000 note on the equipment.How much of Lopez Corporation's realized gain on the sale will be a net Section 1231 gain?

A) $30,000
B) $142,500
C) $212,500
D) $187,500

Correct Answer:

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