Otis bought a 2-unit apartment building in July 2009 for $330,000 and sold it for $400,000 on December 20,2016.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?
A)$153,493.
B)$83,493.
C)$70,000.
D)$0.

Question

Quizplus · Accepted Answer

The accumulated depreciation of $83,493 is subject to a 25% tax rate as it is recaptured under the IRS rules for real estate.

Otis Bought a 2-Unit Apartment Building in July 2009 for $330,000