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? If an amount is zero, enter "0". Round your answers to the nearest dollar. Character of Gain Ordinary income under § 1245. Ordinary income under § 1250 Ordinary income under § 291 § 1231 gain Total recognized gain 287,492 X Total recognized gain 0 57,498 429,994 487,492 ✓ b. If Heron is a sole proprietorship, what is the amount of each type of gain recognized? Character of Gain Ordinary income under § 1245 Ordinary income under 5 1250 Ordinary income under § 291 § 1231 gain 0 0 0 487,492 487,492
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? If an amount is zero, enter "0". Round your answers to the nearest dollar. Character of Gain Ordinary income under § 1245. Ordinary income under § 1250 Ordinary income under § 291 § 1231 gain Total recognized gain 287,492 X Total recognized gain 0 57,498 429,994 487,492 ✓ b. If Heron is a sole proprietorship, what is the amount of each type of gain recognized? Character of Gain Ordinary income under § 1245 Ordinary income under 5 1250 Ordinary income under § 291 § 1231 gain 0 0 0 487,492 487,492
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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?
If an amount is zero, enter "0". Round your answers to the nearest dollar.
Character of Gain
Ordinary income under § 1245
Ordinary income under § 1250
Ordinary income under § 291.
§ 1231 gain
Total recognized gain
287,492 X
§ 1231 gain
Total recognized gain
0
57,498
429,994
487,492
b. If Heron is a sole proprietorship, what is the amount of each type of gain recognized?
Character of Gain
Ordinary income under § 1245
Ordinary income under 5 1250
Ordinary income under § 291
0
0
0
487,492
487,492
✓
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