Question

Taxpayer sells an office building for $300,000. The building was purchased in 1993 for $200,000. Depreciation taken on the building to the point of disposal is $80,000.What is the taxpayer's gain or loss on the sale of the office building?

A. $100,000 gain
B. $120,000 gain
C. $180,000 gain
D. $180,000 loss

Answer 1

The taxpayer has a $180,000 gain on the sale of the office building.

Step-by-step explanation:

To calculate the taxpayer's gain or loss on the sale of the office building, we need to determine the adjusted basis and the selling price. The adjusted basis is the original purchase price minus the depreciation taken. In this case, the adjusted basis is $200,000 - $80,000 = $120,000. The selling price is $300,000.

The gain or loss is then calculated as follows:

Gain or Loss = Selling Price - Adjusted Basis

Gain or Loss = $300,000 - $120,000 = $180,000.

Therefore, the taxpayer has a $180,000 gain on the sale of the office building.