Question

Eighteen-year ACRS nonresidential real property owned by an individual has accumulated accelerated depreciation of $975,000 at January 1, of this year. This property is sold on January 1, this same year. The original cost of the property was $975,000. The sale price was $1,000,000. The amount of the realized and recognized gain is:

Answer 1

Gain= $1,000,000

Step-by-step explanation:

First, we need to calculate the book value:

Book value= original cost - accumulated depreciation

Book value= 975,000 - 975,000

Book value= 0

Now, to calculate the gain or:

Gain/loss= selling price - book value

Gain= 1,000,000 - 0

Gain= $1,000,000