Question

A retail building used in the trucking business of a sole proprietor is sold on February 10, 2018 for $2,000,000. Accelerated depreciation of $800,000 had been taken on the building and it had been acquired in 1986 for $800,000. Straight-line depreciation for the same holding period would have been $800,000. What is the maximum unrecaptured § 1250 gain from this disposition after considering depreciation recapture?

Group of answer choices

$800,000

$1,200,000

$0

$2,000,000

None of the above.

Answer 1

Solution:

The Answer is $ 800,000.

Explanation:

1) As per IRS, Maximum unrecaptured § 1250 gain from this disposition will be limited to depreciation claimed in the earlier years.

2) In this question, it is given that depreciation of $800,000 had been taken on the building till now.

3) Remaining gains will be taxed under capital gain.

4) So, Remaining options are incorrect.