Which of the following transactions results solely in §1245 gain?
A) Sale of land held for more than one year and where the amount realized exceeds the adjusted basis.
B) Sale of machinery held for more than one year and where the accumulated depreciation exceeds the gain realized.
C) Sale of machinery held for less than one year.
D) Sale of machinery held for more than one year and where the gain realized exceeds the accumulated depreciation.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

Section 1245 gain occurs when depreciable personal property, like machinery, is sold and the gain is due to depreciation recapture. In option B, the accumulated depreciation exceeds the gain realized, meaning the entire gain is recaptured as §1245 gain.

Which of the Following Transactions Results Solely in §1245 Gain