Question

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?

a. §1245.
b. §291.
c. Capital.
d. §1231.
e. None of the choices are correct.

Answer 1

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in a §1231 loss, which is treated as an ordinary loss and can be used to offset other types of income.

Step-by-step explanation:

The sale of machinery at a loss that was used in a trade or business and held for more than one year results in a §1231 loss. §1231 is a tax code section that deals with the tax treatment of gains and losses on the sale or exchange of certain business assets. A §1231 loss is treated as an ordinary loss, which means it can be used to offset other types of income, such as salaries or interest.