Sylvio purchased an apartment building as an investment in January 2008 for $383,500 and sold it for $475,000 in 2014.He reported $68,436 of allowed accumulated straight-line depreciation.If Sylvio is in the highest tax bracket for ordinary income,how much of his gain qualifies for preferential tax treatment?

Question

Quizplus · Accepted Answer

The total gain is $91,500 ($475,000 - $383,500). The gain attributable to depreciation ($68,436) is taxed at a maximum rate of 25%, while the remaining gain ($91,500 - $68,436 = $23,064) qualifies for preferential long-term capital gains tax rates.

Sylvio Purchased an Apartment Building as an Investment in January