Eighteen-year ACRS nonresidential real property owned by an individual has accum
ID: 2432576 • Letter: E
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.
66. The amount of the realized and recognized gain is:
a. $60,000
b. $150,000
c. $175,000
d. $1,000,000
67. The character or nature of the gain realized and recognized is:
a. All ordinary gain
b. All capital gain
c. $105,000 capital gain, $70,000 ordinary income
d. $25,000 capital gain, $975,000 ordinary income
e. None of the above
68. If the property had been depreciated using the straight-line method, which of the answers to question 67 would now be correct?
a. All ordinary gain
b. All capital gain
c. $105,000 capital gain, $70,000 ordinary income
d. $25,000 capital gain, $975,000 ordinary income
e. None of the above
e. None of the above
a.a. $60,000
b.b. $150,000
c.c. $175,000
d.d. $1,000,000
67. The character or nature of the gain realized and recognized is:
a.a. All ordinary gain
b.b. All capital gain
c.c. $105,000 capital gain, $70,000 ordinary income
d.d. $25,000 capital gain, $975,000 ordinary income
e.e. None of the above
68. If the property had been depreciated using the straight-line method, which of the answers to question 67 would now be correct?
a.a. All ordinary gain
b.b. All capital gain
c.c. $105,000 capital gain, $70,000 ordinary income
d.d. $25,000 capital gain, $975,000 ordinary income
e.e. None of the above
e. None of the above
Explanation / Answer
Solution 66 ) Amount of realized and recognized gain = Selling price - (cost of original asset - accumulated depreciation)
= $1000000 - ( $975000 - $975000)
= $1000000 - $0
= $1000000 ( answer) option d is correct
Solution 67) the character or nature of realized gain = all capital gain ( option b is the correct answer)
Solution 68) If property depreciated would be as per the straight-line method, even then the nature of realized gain will be all capital gain ( option b would be the correct answer)
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