Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?
A) $40,000 ordinary and $360,000 §1231 gain.
B) $200,000 ordinary and $200,000 §1231 gain.
C) $400,000 ordinary gain.
D) $400,000 capital gain.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

For corporations, §291 recapture is 20 percent of the lesser of depreciation taken or the recognized gain as ordinary income. The remaining gain is §1231.

Bateman Corporation Sold an Office Building That It Used in Its