Wilshire Corporation purchased a commercial building in 1997 for $975,000. During 2014, the building is sold for $775,000. The actual 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 sale price ($775,000) minus the adjusted basis ($975,000 - $300,000 depreciation = $675,000), resulting in a $100,000 gain. Since the building is a depreciable real property, the gain is a Section 1231 gain.

Wilshire Corporation Purchased a Commercial Building in 1997 for $975,000