Question

Problem 17-40 (a) (LO. 2, 4) On September 3, 2016, Ivory Company acquired an apartment building for $1,500,000 (with $300,000 being allocated to the land). The straight-line cost recovery method was used. The property was sold on September 30, 2019, for $1,400,000. Click here to access the Exhibit for MACRS Straight-Line Depreciation for Real Property. If an amount is zero, enter "0". Do not round cost recovery factors. Round the total cost recovery deduction to the nearest dollar. a. Compute the cost recovery and adjusted basis for the building. The cost recovery is $ 129,842 X, and the adjusted basis for the building is $ 110,927 X. Feedback b. What are the amount and nature of Ivory's gain or loss from disposition of the property? What amount, if any, of the gain is unrecaptured § 1250 gain? There is $ 10,158 X of recognized gain on the sale of the property, of which $ 10,158 X is subject to § 1250 recapture. Feedback Feedback

Answer 1

1.

Compute the cost recovery and adjusted basis for building as follows:

$9k=$

Thus, cost recovery be $ 99,842.36.

Adjusted basis for building is as follows:

$g+qXWXXHjWC2AAAAABJRU5ErkJggg==$

2.

Compute the amount of gain from disposition as follows:

If recapture, the gain will be as follows:

$70XAAAAAASUVORK5CYII=$