Ross purchased a building in 1985,which he uses in his manufacturing business.Ross uses the ACRS statutory rates to determine the cost-recovery deduction for the building.Ross's original cost for the building is $500,000 and cost-recovery deductions allowed are $500,000.If the building is sold for $340,000,the tax results to Ross are
A)$340,000 LTCG.
B)$340,000 Sec.1231 gain.
C)$340,000 Sec.1245 ordinary income.
D)$340,000 Sec.1250 ordinary income.

Question

Quizplus · Accepted Answer

C)
 11ea7cb8_54d3_458b_928c_654fe0cce2b0_TB1258_00 Section 1245 ordinary income recapture applies to non-residential real estate placed in service after December 31,1980,and before January 1,1987.This property qualifies as such.Gain realized is considered 1245 ordinary income to the extent of all depreciation taken-$500,000 in this case.Because the gain was a lesser amount,all of the gain realized is 1245 ordinary income.

Ross Purchased a Building in 1985,which He Uses in His