Reference no: EM132516885

Question - Gemini Auto Repair is a calendar year taxpayer. In 2018, the repair shop purchased a light weight truck for $40,000 that it used to drive customers back and forth to their cars while the shop worked on their cars (i.e. for business purposes). In 2019, the repair shop sold the truck for $35,000. Assume that the lightweight truck was the only asset Gemini purchased in 2018. Gemini Auto Repair opted out of Sec. 179 and bonus depreciation for 2018.

Do not use any MACRS tables to calculate regular depreciation, instead just assume that the depreciation deductions Gemini actually took for the truck for 2018 and 2019 were $8,200 and $8,300, respectively. What was the total amount of gain (or loss) for Gemini in 2019 on the sale of the truck?

I. $5,000 loss

II. $3,200 gain

III. $3,300 gain

IV. $11,500 gain

V. $35,000 gain

VI. None of the above