ANSWER:
(b).
What is the amount and character of the gain Longworth will recognize on the sale if the sale proceeds increased to $66,500.
Description | Amount | Explanation |
(1) Amount Realized | 66500 | Given |
(2) Original Basis | 53500 | Given |
(3) Accumulated Depreciation | 22500 | Given |
(4) Adjusted Basis | 31000 | (2) - (3) |
(5)Gain/(Loss) Recognized | 35500 | (1) - (4) |
(6)Ordinary income (1245 depreciation recapture) | 22500 | Lesser of (3) or (5) |
1231 gain | 13000 | (5) - (6) |
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