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

Individual Income Taxes
43rd Edition
ISBN:9780357109731
Author:Hoffman
Publisher:Hoffman
Chapter15: Property Transactions: Nontaxable Exchanges
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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
 
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.
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