Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the cost−recovery deduction for the building. Alejandro's original cost for the building is $500,000 and cost−recovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are A. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain. B. $800,000 Sec. 1231 gain. C. $800,000 Sec. 1245 ordinary income. D. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income
Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the cost−recovery deduction for the building. Alejandro's original cost for the building is $500,000 and cost−recovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are A. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain. B. $800,000 Sec. 1231 gain. C. $800,000 Sec. 1245 ordinary income. D. $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the
cost−recovery
deduction for the building. Alejandro's original cost for the building is $500,000 and
cost−recovery
deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are$500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain.
$800,000 Sec. 1231 gain.
$800,000 Sec. 1245 ordinary income.
$500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education