@Opus 17 wrote:
....if your other income puts you in the 32% or higher tax bracket, you might pay more tax on the machine than if you reported it as recapture....
There is no option here since the machine is personal property (Section 1245 property), not real property (Section 1250) and, as such, there is no 25% cap on Section 1245 property as there is with Section 1250 property.
As a result, reporting the sale as miscellaneous or other income will not have any kind of adverse impact. The other alternative would be to report the sale on Form 4797 (Part III) as the sale of Section 1245 property where the basis is $0, but that would effectively achieve the same result as reporting the sales proceeds as other income.
