Mr.and Mrs.Marley operate a small business.This year,the Marleys sold a commercial office building used in their business for $1.1 million.They purchased the building in 2003 for a cost of $900,000 and have deducted $300,000 MACRS depreciation through date of sale.The Marleys should characterize the $500,000 gain recognized on sale as:

Question

Quizplus · Accepted Answer

The gain on the sale of the commercial office building is a Section 1231 gain since it was held for more than one year and used in the Marleys' trade or business. Since the total depreciation taken on the building is less than the gain recognized, none of the gain is recaptured as ordinary income.

MrAnd MrsMarley Operate a Small Business