Oisa Corporation purchased Residential Real Estate at a cost of $350,000. Accelerated Depreciation in the amount...
Oisa Corporation purchased Residential Real Estate at a cost of $350,000. Accelerated Depreciation in the amount of $156,000 had been correctly claimed on the property when the property was sold for $520,000. Straight-Line Depreciation would have been $120,000. On the sale, Oisa Corporation would recognize gain as follows:
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$326,000 Section 1250 Gain (Ordinary Income). |
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$36,000 Section 1250 Gain (Ordinary Income) and $290,000 Section 1231 Gain (Long-Term Capital Gain). |
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$60,000 Section 1250 Gain (Ordinary Income) and $266,000 Section 1231 Gain (Long-Term Capital Gain). |
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$326,000 Section 1231 Gain (Long-Term Capital Gain). |
Homework Answers
Answer -
$36,000 Section 1250 Gain (Ordinary Income) and $290,000 Section 1231 Gain (Long-Term Capital Gain).
Explanation -
In the given question $156,000 was accelerated depreciation charged excess on the Real Estate. As per Acrual Depreciation it is $120,000. Due to those excess depreciation amount of expenses will be reduced hence we have to revised it with the difference $36,000 as ordinery income of business.
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