Otis bought a 2-unit apartment building in July 2010 for $330,000 and sold it for $400,000 on December 20,2017.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?
A)$0.
B)$70,000.
C)$83,493.
D)$153,493.

Question

Quizplus · Accepted Answer

$83,493 of the gain will be taxed at 25% because this amount represents the accumulated depreciation on the property, which is recaptured upon sale and taxed at a special 25% rate for real estate.

Otis Bought a 2-Unit Apartment Building in July 2010 for $330,000