Elizabeth paid $400,000 for a warehouse. Using 39-year straight-line depreciation, Elizabeth deducts $24,868 for the first two years of usage. At the beginning of the third year, Elizabeth sells the warehouse for $380,000. How much of the gain is recaptured as Section 1250 ordinary income?

Question

Quizplus · Accepted Answer

Under Section 1250, there is no recapture of gain as ordinary income for real property depreciated using the straight-line method. Since Elizabeth used straight-line depreciation, there is no Section 1250 recapture.

Elizabeth Paid $400,000 for a Warehouse