Problem:
Patriot Industries recently sold its fin fabrication machine for $150,000. The machine originally cost $500,000 and has a current book value of $100,000. Patriot's marginal tax rate is 35 percent for ordinary income and 35 percent for capital gains income.
Required:
Question 1: What amount of gain has Patriot received from this transaction?
Question 2: Is this a capital or ordinary gain?
Question 3: How much tax must Patriot pay on this transaction?
Note: Please provide reasons to support your answer.