Alejandro purchased a building in 1985,which he uses in his manufacturing business.Alejandro used the ACRS statutory rates to determine the cost-recovery deduction for the building.Alejandro's original cost for the building is $500,000 and cost-recovery deductions allowed are $500,000.If the building is sold for $800,000,the tax results to Alejandro are
A)$500,000 Sec.1245 ordinary income and $300,000 Sec.1231 gain.
B)$800,000 Sec.1245 ordinary income.
C)$500,000 Sec.1245 ordinary income and $300,000 Sec.1250 income.
D)$800,000 Sec.1231 gain.

Question

Quizplus · Accepted Answer

The entire cost-recovery deduction of $500,000 is recaptured as ordinary income under Sec. 1245, and the remaining $300,000 is treated as Sec. 1231 gain.

Alejandro Purchased a Building in 1985,which He Uses in His