Question

Samson Corporation sold the following during the year:

Two delivery trucks purchased in March 2016 for $78,000 are sold in June for $70,000Land used for storage for 5 years sold for $400,000 that had a basis of $80,000Machines with a basis of $200,000 are sold for $75,000 to obtain newer models.A building purchased 8 years ago for $350,000 is sold for $425,000 with an adjusted basis of $300,000 due to depreciation.

What is the character and amount of gain or loss recognized? 

Answer 1

Solution:

Short-term capital Loss on sale of delivery truck = $70,000 -78,000 = $(8,000)

Long-term capital gain on sale of land = $400,000-80,000 = $320,000

Long-term capital loss on sale of machines = $75,000 - $200,000 = $(125,000)

Long-term capital gain on sale of building = $425,000 -300,000 = $125,000

Thus, Net gain = $312,000 which includes:

Net long-term capital gain/(loss) = $320,000 -125,000 + 125,000 = $320,000

and Short-term capital loss = $(8,000)