Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the cost−recovery deduction for the building. Alejandro's original cost for the building is $500,000 and cost−recovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are A. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain. B. $800,000 Sec. 1231 gain. C. $800,000 Sec. 1245 ordinary income. D. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income
Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the cost−recovery deduction for the building. Alejandro's original cost for the building is $500,000 and cost−recovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are A. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain. B. $800,000 Sec. 1231 gain. C. $800,000 Sec. 1245 ordinary income. D. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income
Chapter15: Property Transactions: Nontaxable Exchanges
Section: Chapter Questions
Problem 1CPA
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Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the
cost−recovery
deduction for the building. Alejandro's original cost for the building is $500,000 and
cost−recovery
deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are$500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain.
$800,000 Sec. 1231 gain.
$800,000 Sec. 1245 ordinary income.
$500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income.
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