Mary Brown purchased an apartment building on January 1, 2004, for $200,000. The building was depreciated...
Mary Brown purchased an apartment building on January 1,
2004, for $200,000. The building was depreciated using the
straight-line method. On December 31, 2013, the building was sold
for $210,000 when the asset basis net of accumulated depreciation
was $160,000. On her 2013 tax return, Brown should report
a. Sec. 1231 gain of $10,000 and ordinary income of $40,000.
b. Sec. 1231 gain of $40,000 and ordinary income of $10,000.
c. Ordinary income of $50,000.
d. Sec. 1231 gain of $50,000.
Homework Answers
Ans :d. Sec. 1231 gain of $50,000
Section 1231 deals with capital gain or loss arising from real and depreciable property used in trade or business and held over one year. Property here includes personal property as well as real property such as building. Here whole profit of $50,000 will be treated as gain U/S 1231
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