Aneta sold an apartment building for $713,470 in 2014.She purchased the building in 2008 for $600,000 and has taken $151,806 in depreciation on the building.Assuming Aneta is in the 33% tax bracket,how is her gain taxed?

Question

Quizplus · Accepted Answer

To determine Aneta's gain, we need to calculate the adjusted basis of the building first. Adjusted basis = purchase price - accumulated depreciation.

Adjusted basis = $600,000 - $151,806 = $448,194

Aneta's gain = selling price - adjusted basis = $713,470 - $448,194 = $265,276

Since Aneta is in the 33% tax bracket, her gain will be taxed at 15% for long-term capital gains and 25% for depreciation recapture.

Therefore, $113,470 (the portion of the gain that is not subject to recapture) will be taxed at 15%. The remaining $151,806 (the depreciation recapture) will be taxed at 25%.

The answer is D: $151,806 at 25% and $113,470 at 15%.

Aneta Sold an Apartment Building for $713,470 in 2014