Charmine, a Single Taxpayer with No Dependents, Has Already Incurred

Essay

Charmine, a single taxpayer with no dependents, has already incurred a $10,000 § 1231 gain in 2017 and has no § 1231 lookback losses. The taxpayer purchased a business machine for $100,000 five years ago, $70,000 of depreciation has been taken on it, and the machine is now worth $90,000. How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $352,000 of taxable income which does not include a $10,000 § 1231 gain or any capital gains or losses, what is her taxable income?