During 2012, Judy Jenkins sold Section 1250 nonresidential real property for $30,000. She had purchased the property in 1980 at a cost of $100,000. Judy had properly claimed depreciation totaling $80,000, of which $20,000 was additional (excess) depreciation. What is the amount of Judy's ordinary income?

Question

Quizplus · Accepted Answer

If depreciable nonresidential realty purchased pre-ACRS is held for more than 12 months, total depreciation is recaptured as ordinary income to the extent of the lesser of the gain from the sale of that property or the excess depreciation. Judy's realized gain was $10,000. ftis was the diﬀerence between the sales price of $30,000 and her adjusted basis of $20,000 (basis of $100,000 − $80,000 of depreciation). Only $10,000 of the total depreciation is recaptured as ordinary income, because the recapture amount is limited to the extent of the $10,000 realized gain.

During 2012, Judy Jenkins Sold Section 1250 Nonresidential Real Property