In general, if a depreciable asset used in business is sold for more than its depreciated (tax) book value,

http://en.wikipedia.org/wiki/Depreciation_recapture

"Depreciation recapture is the USA Internal Revenue Service (IRS) procedure for collecting income tax on a gain realized by a taxpayer when the taxpayer disposes of an asset that had previously provided an offset to ordinary income for the taxpayer through depreciation. In other words, because the IRS allows a taxpayer to deduct the depreciation of an asset from the taxpayer’s ordinary income, the taxpayer has to report any gain from the disposal of the asset (up to the recomputed basis) as ordinary income, not as a capital gain. Any gain over the recomputed basis will be taxed as a capital gain in accordance with section1231 of the Internal Revenue Code (IRC). This article is about the system used in the USA and Canada, but other countries have similar procedures. In the UK, HMRC uses "negative depreciation".

I encountered with the answer of ms Elke woofter.

I agree with experts

Thank you

Correct Ans is

"Recapture of depreciation" and is taxed at the firm's ordinary income tax rate.>>>>>>>>>>>>

It is capital gain tax and and taxed at the corporate capital gain tax

Option fourth is right answer <<<<<<<<

My answer is choice (D) "recapture of depreciation" and is taxed at the firm's ordinary income tax rate.

Any amount realized in excess of book value but less than the asset's depreciable basis is considered as a "capital gain" and is taxed at the corporate capital gains tax.

recapture of depreciation" and is taxed at the corporate capital gains rate.