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Alpha sold machinery that it used in its business to Beta, a related entity, for $40,250. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $49,750 and has claimed $30,250 of depreciation expense. What is the amount and character of Alpha's gain?Alpha sold machinery that it used in its business to Beta, a related entity, for $40,250. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $49,750 and has claimed $30,250 of depreciation expense. What is the amount and character of Alpha's gain?

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anthougo

The amount and character of Alpha's gain from the sale to Beta are $20,750 capital gains.

What is capital gain?

A capital gain is an excess realized from the sale of assets because of the increased value compared to the book value.

Capital gain is subject to capital gain tax.

Data and Calculations:

Cost of machinery = $49,750

Accumulated depreciation = $30,250

Book value = $19,500 ($49,750 - $30,250)

Sales to a related entity = $40,250

Capital gains = $20,750 ($40,250 - $19,500)

Thus, the amount and character of Alpha's gain from the sale to Beta are $20,750 capital gains.

Learn more about capital gains at https://brainly.com/question/9144560

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