Philip purchased an apartment building in 1987 for $1,000,000.During 2013,the building is sold for $800,000.The accumulated depreciation on the building as of the sale date was $300,000.What is the amount and character of the gain recognized on the sale?
A)$100,000 Section 1250 ordinary income.
B)$100,000 Section 1231 long term capital gain.
C)$100,000 unrecaptured Section 1250 gain.
D)$100,000 ordinary income.

Question

Quizplus · Accepted Answer

The amount of gain recognized on the sale is calculated as follows:
Sale price ($800,000) - Book value ($1,000,000 - $300,000) = $500,000. This gain is considered unrecaptured Section 1250 gain, which is a type of Section 1231 gain. Therefore, choice C is the correct answer.

Philip Purchased an Apartment Building in 1987 for $1,000,000