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Green Industries

Green Industries (a sole proprietorship) sold three SS1231 assets during 2005.
Data on these property dispositions are as follows:

Asset Cost Acquired Depreciation Sold for Sold on
Rack $100,000 10/10/01 $60,000 $135,000 10/10/05
Forklift $35,000 10/16/02 $23,000 $5,000 10/10/05
Bin $87,000 03/12/04 $34,000 $60,000 10/10/05

a. Determine the amount and the character of the recognized gain or loss from the disposition of each asset.

b. Assuming Green has $5,000 nonrecapture net ss1231 losses from the five prior years, how much of the 2005 recognized gains is treated as capital gains?

Solution Preview

Green Industries (a sole proprietorship) sold three SS1231 assets during 2005.
Data on these property dispositions are as follows:

Asset Cost Acquired Depreciation Sold for Sold on

Rack $100,000 10/10/01 $60,000 ...

Solution Summary

This solution is comprised of a detailed explanation to determine the amount and the character of the recognized gain or loss from the disposition of each asset and answer how much of the 2005 recognized gains is treated as capital gains.

$2.19