In the current year, Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago. Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000. How much of the gain is taxable as ordinary income?

Question

Quizplus · Accepted Answer

The gain taxable as ordinary income is limited to the amount of depreciation taken on the property, which is $7,000. The rest of the gain would be treated as capital gain.

In the Current Year, Tim Sells Section 1245 Property for $28,000