Reference no: EM132537

Question:

clark sells an office building in the current year for $600,000. The building was purchased in 1981 for $350,000 and the ACRS depreciation was taken on the building for a net total of $280,000. When the building was purchased, $70,000 of the purchase price was given to the land. Upon the sale, the selling price allocated to the land was the same ratio as when the purchase was made in 1981. Clark has never had other Sec.1231 transactions.

1. what is the recognized profit or loss on the sale of the building and the character of the profit?

2. How will the profit be taxed, that is, how much of the gain can be ordinary income, if any, and how much of the gain will be Sec. 1231 gain, if any?