Author Question: Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro uses ... (Read 64 times)

fagboi · **on:** Sep 13, 2020

Question 1

A building used in a business for more than a year is sold. Sec. 1250 will not cause depreciation recapture if
◦ the building is fully depreciated.
◦ the building was placed in service after 1986.
◦ straight-line depreciation was used.
◦ All of these.

Question 2

Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro uses the ACRS statutory rates to determine the cost-recovery deduction for the building. Alejandro's original cost for the building is $500,000 and cost-recovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are
◦ $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain.
◦ $800,000 Sec. 1245 ordinary income.
◦ $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income.
◦ $800,000 Sec. 1231 gain.

nothere · **Reply #1 on:** Sep 13, 2020

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