Question

Beige Corporation, a C corporation, purchases a warehouse on August 1, 2002, for $1 million. Straight-line depreciation is taken in the amount of $411,750 before the property is sold on June 12, 2018, for $1.2 million. What is the amount and character of the gain recognized by Beige on the sale of the realty?

Answer 1

The amount and character of the gain recognized by Beige on the sale of the realty is Section 1231 gain of $611,750

Step-by-step explanation:

Beige Corporation purchased and held the property for more than one year so they must use Section 1231, according to this section the gain for selling this property is a long-term capital gain.

Purchase Value - Depreciation = Actual Value

$1,000,000 - $411,750 = $588.250

Sale Value - Actual Value = Gain or loss

$1,200,000 - $588.250,00

= $611.750,00