Sylvio purchased an apartment building as an investment in January 2009 for $383,500 and sold it for $475,000 in 2015. He reported $68,436 of allowed accumulated straight-line depreciation. If Sylvio is in the highest tax bracket for ordinary income, how much of his gain qualifies for preferential tax treatment?

Question

Quizplus · Accepted Answer

The total gain is $91,500 ($475,000 - $383,500). The $68,436 depreciation is taxed at a maximum rate of 25%, and the remaining gain of $23,064 ($91,500 - $68,436) qualifies for preferential tax treatment at the long-term capital gains rate.

Sylvio Purchased an Apartment Building as an Investment in January