Philip purchased an apartment building in 1997 for $1,000,000. During 2014, the building is sold for $800,000. The accumulated depreciation on the building as of the sale date was $300,000. What is the amount and character of the gain recognized on the sale?

Question

Quizplus · Accepted Answer

The gain is calculated as the selling price ($800,000) minus the adjusted basis ($1,000,000 - $300,000 depreciation), resulting in a $100,000 gain. This gain is unrecaptured Section 1250 gain, taxed at a maximum rate of 25%.

Philip Purchased an Apartment Building in 1997 for $1,000,000