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4 March, 21:52

Beige Corporation, a C corporation, purchases a warehouse on August 1, 2002, for $1 million. Straight-line depreciation is taken in the amount of $411,750 before the property is sold on June 12, 2018, for $1.2 million. What is the amount and character of the gain recognized by Beige on the sale of the realty?

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  1. 5 March, 00:37
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    The amount and character of the gain recognized by Beige on the sale of the realty is Section 1231 gain of $611,750

    Explanation:

    Beige Corporation purchased and held the property for more than one year so they must use Section 1231, according to this section the gain for selling this property is a long-term capital gain.

    Purchase Value - Depreciation = Actual Value

    $1,000,000 - $411,750 = $588.250

    Sale Value - Actual Value = Gain or loss

    $1,200,000 - $588.250,00

    = $611.750,00
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