Sally acquired an apartment building 15 years ago for $150,000 and sold it for $410,000 in the current year. At the time of the sale, there is $65,000 of accumulated straight-line depreciation on the apartment building. Assuming Sally is in the 32 percent tax bracket for ordinary income, how much of her gain is taxed at 15 percent?

Question

Business

Regan Santos

26 December, 05:03

Sally acquired an apartment building 15 years ago for $150,000 and sold it for $410,000 in the current year. At the time of the sale, there is $65,000 of accumulated straight-line depreciation on the apartment building. Assuming Sally is in the 32 percent tax bracket for ordinary income, how much of her gain is taxed at 15 percent?

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Answers (1)

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Emiliano Benjamin · Answer 1

Capital gain taxed @ 15% = $260000

Explanation:

given data

Cost of Building = $150,000

sold = $410,000

accumulated depreciation = $65,000

tax bracket = 32 %

to find out

how much of her gain is taxed at 15 percent

solution

first we get here gain on sale that is express as

gain on sale = sold + Accumulated Depreciation - Cost of Building ... 1

gain on sale = $410,000 + $65,000 - $150,000

gain on sale = $325000

and

Unrecaptured depreciation of taxed @ 25% is = $65000

so Capital gain taxed @ 15% is = $325000 - $65000

Capital gain taxed @ 15% = $260000