Burt purchased an apartment building on January 1,1998,for $345,000.The building has been depreciated over the appropriate recovery period using the straight-line method.On December 31,2011,the building was sold for $420,000,when the accumulated depreciation was $126,500.On his 2011 tax return,Burt should report:

Question

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The sale price minus the original cost gives a gain of $75,000. The accumulated depreciation of $126,500 is subject to unrecaptured Section 1250 gain rules, taxed at a maximum of 25%. The remaining gain is a Section 1231 gain.

Burt Purchased an Apartment Building on January 1,1998,for $345,000