Problem:
Copper Industries (a sole proprietorship) sold three § 1231 assets during 2014.
Data on these property dispositions are as follows:
Asset Cost Acquired Depreciation Sold for Sold on
Rack $110,000 10/10/11 $70,000 $55,000 10/10/14
Forklift 45,000 10/16/10 21,000 15,000 10/10/14
Bin 97,000 03/12/13 31,000 60,000 10/10/14
Required:
Question 1: Determine the amount and the character of the recognized gain or loss from the disposition of each asset.
Question 2: Assuming that Copper has $6,000 non recaptured net § 1231 losses from prior years, how much of the 2014 recognized gains is treated as capital gains?
Note: Please explain comprehensively and give step by step solution.