Reference no: EM133112921
Question - Heron Company purchases commercial realty on November 13, 2003, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 22, 2021, for $850,000.
What are the tax consequences of the sale of realty if Heron is (a) a C corporation and (b) a sole proprietorship?
a. If Heron is a C corporation, what is the amount of each type of gain recognized?
In general, the recapture rules under Sections 1245 and 1250 are equally applicable to both individual and corporate taxpayers. However, under § 291, corporations may have more depreciation recapture (ordinary income) on the disposition of § 1250 property than individuals.
b. If Heron is a sole proprietorship, what is the amount of each type of gain recognized?
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