George purchased a commercial building in 1999 for $900,000.During 2016,the building is sold for $700,000.The actual accelerated depreciation on the building as of the sale date was $400,000.Straight-line depreciation for the same period would have been $350,000.What is the amount and character of the gain recognized on the sale?

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The building sold for $700,000, which is less than the original cost of $900,000, resulting in a loss of $200,000. However, the actual accelerated depreciation of $400,000 exceeds the straight-line depreciation of $350,000, resulting in a gain on the sale. This gain is considered Section 1250 ordinary income up to the amount of depreciation taken or allowable, which is $350,000. The remaining gain of $50,000 is an unrecaptured Section 1250 gain, subject to a maximum tax rate of 25%. Therefore, the amount and character of the gain recognized on the sale are $50,000 Section 1250 ordinary income and $150,000 unrecaptured Section 1250 gain.

George Purchased a Commercial Building in 1999 for $900,000