Sally acquired an apartment building in 1998 for $150,000 and sold it for $400,000 in 2013.At the time of the sale,there is $55,000 of accumulated straight-line depreciation on the apartment building.Assuming Sally is in the 35 percent tax bracket for ordinary income,how much of her gain is taxed at 15 percent?

Question

Quizplus · Accepted Answer

The gain on the sale is $400,000 - ($150,000 - $55,000) = $305,000. The $55,000 depreciation is taxed at a higher rate, so the remaining $250,000 is taxed at 15%.

Sally Acquired an Apartment Building in 1998 for $150,000 and Sold