Bozeman Sold Equipment That It Uses in Its Business for $80,000.Bozeman

Bozeman sold equipment that it uses in its business for $80,000.Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense.What is the amount and character of Bozeman's gain or loss?

A) $25,000 §1231 gain.
B) $20,000 ordinary gain,and $5,000 §1231 gain.
C) $5,000 ordinary gain,and $20,000 §1231 gain.
D) $25,000 capital gain.
E) None of thesE.§1245 recaptures the lesser of depreciation taken ($20,000) or gain ($25,000) as ordinary income.The remaining $5,000 gain would be §1231 gain.

Correct Answer:

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