Octet Corporation placed a small storage building in service in 2002. 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

Question

Quizplus · Accepted Answer

The gain is ordinary to the extent of the cost recovery deductions taken, which is $300,000. The remaining gain of $800,000 ($1,100,000 - $300,000) is Sec. 1231 gain.

Octet Corporation Placed a Small Storage Building in Service in 2002