What is the recognized profit or loss on the sale

Reference no: EM132571

Question:

Clark sells an office building through 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 overall of $280,000. When the building was purchased, $70,000 of the purchase price was allocated to the land. Upon the sale, the selling price allocated to the land was the similar 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 gain?

2. How can the gain 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?

Reference no: EM132571

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