Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain.
-A business sells a machine used in its business for $18,000. It had purchased the machine 10 months earlier for $26,000. What is the amount and type of the $8,000 loss on the sale of the asset?
A) Ordinary loss
B) Section 1231 loss
C) Section 1245 loss
D) Capital loss

Question

Quizplus · Accepted Answer

The loss on the sale of the machine is an ordinary loss because the machine is not a capital asset.

Identify the Type(s) of Gain or Loss That Would Be