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Brad Sold a Rental House That He Owned for $250,000

Question 54

Multiple Choice

Brad sold a rental house that he owned for $250,000.Brad bought the rental house five years ago for $225,000 and has claimed $50,000 of depreciation expense.What is the amount and character of Brad's gain or loss?


A) $25,000 ordinary and $50,000 unrecaptured §1250 gain.
B) $25,000 §1231 gain and $50,000 unrecaptured §1250 gain.
C) $75,000 ordinary gain.
D) $75,000 capital gain.
E) None of thesE.Unrecaptured §1250 recaptures the lesser of depreciation taken ($50,000) or gain ($75,000) .This amount is then taxed at no more than 25%.The remaining $25,000 gain would be §1231 gain.

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