Octet Corporation placed a small storage building in service in 2000.Octet's original cost for the building is $800,000 and the cost recovery deductions are $300,000.This year the building is sold for $1,100,000.The amount and character of the gain are
A)Ordinary gain of $60,000 and Sec.1231 gain of $540,000.
B)Ordinary gain of $300,000 and Sec.1231 gain of $300,000.
C)Ordinary gain of $600,000.
D)Sec.1231 gain of $600,000.

Question

Quizplus · Accepted Answer

The ordinary gain is the recapture of depreciation, which is $300,000. The remaining gain is a Sec. 1231 gain: $1,100,000 - $800,000 = $300,000 total gain, minus $300,000 recapture, equals $540,000 Sec. 1231 gain.

Octet Corporation Placed a Small Storage Building in Service in 2000.Octet's