How much will be treated as ordinary income

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ABC Inc., has a 2019 net § 1231 gain of $84,000 and had a $12,000 net § 1231 loss in 2018. The company also had a $12,000 net § 1231 loss in 2017 and a $15,000 net § 1231 loss in 2014. All of these prior losses are unrecaptured.

Problem A) For 2019, how will ABC's net § 1231 gain be treated (how much will be treated as ordinary income and how much as long-term capital gain)?

Problem B) If ABC could wait until 2020 to sell the asset associated with the net § 1231 gain of $84,000, would there be any benefits to the taxpayer (other than deferring the gain)?

Problem C) Assume that ABC owns another asset (equipment used to produce inventory) originally purchased for $700,000. Total depreciation deductions amounted to $520,000. The equipment is sold in 2021 for $800,000. How much is the recognized gain and what is the character of the gain?

Reference no: EM132812720

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