Landmine Inc. sold machinery for $27,000 on December 31, 2007. The machinery had been purchased on January 2, 2004 for $30,000 and had an adjusted basis of $21,000 at the date of the sale. For 2007, what should Landmine Inc report?a. Ordinary income of $6,000b. a 1231 gain of $3,000 and a $3,000c. A 1231 gain of $6,000d. A 1231 gain of $6,000 and $3,000 of ordinary incomee. None of the above.Since this is machinery and there is depreciation, woudl this be a 1245 machine? 1245 would make it ordinary, I think. Is this right? I think the answer is a.
I suppose since the total gain is $6000 and the depreciation taken was $9000, then the $6000 gain would all be recaptured as ordinary income under Section 1245. So the answer would be a.
