Emily,whose tax rate is 28%,owns an office building which she purchased for $900,000 on March 18 of last year.The building is sold for $950,000 on February 20 of this year when the adjusted basis of the building was $876,000.The tax results to Emily are
A)$74,000 1231 gain taxed at 15%.
B)$74,000 ordinary income taxed at 28%.
C)$24,000 1250 unrecaptured gain taxed at 25% and $50,000 1231 gain taxed at 15%.
D)$24,000 1231 gain taxed at 15% and $50,000 ordinary income taxed at 28%.

Question

Quizplus · Accepted Answer

B)The gain realized is $950,000 - $876,000 = $74,000.The gain is neither Sec.1231 gain nor Sec.1250 gain because the holding period is not more than one year.Thus,the gain is taxed at ordinary income rates,in this case,28%.

Emily,whose Tax Rate Is 28%,owns an Office Building Which She