Question

Renata Corporation purchased equipment in 2018 for $244,800 and has taken $110,160 of regular MACRS depreciation. Renata Corporation sells the equipment in 2020 for $146,880. What is the amount and character of Renata's gain or loss? Renata Corporation has a gain of $fill in the blank 1 of which $fill in the blank 2 is treated as ordinary income due to § 1245 recapture

Answer 1

Answer and Explanation:

The computation of the amount and the character of the renata gain or loss is shown below;

purchased equipment in 2018 $244,800

regular MACRS depreciation taken -$110,160

WDV as per MACRS method $134,640

Less: Sell the equipment -$146,880

loss on sale of equipment -$12,240

There is a loss and that would be short term capital loss