Ricardo acquired a warehouse for business purposes on August 30, 1997. The build

Question

Ricardo acquired a warehouse for business purposes on August 30, 1997. The building cost $400,000. He took $226,900 of depreciation on the building and then sold it for $500,000 on July 1, 2016. What are the amount and nature of Ricardo’s gain or loss on the sale of the warehouse?

What is the adjusted basis for the warehouse?

What amount of the gain or loss is realized on the sale of the warehouse?

What amount of the gain or loss is unrecaptured?

At what rate is the unrecaptured gain or loss taxed?

What amount of gain or loss qualifies as a § 1231 gain or loss?

Explanation / Answer

Amount of Gain on the sale of Warehous is $326900

It is Capital in nature.

Value of the warehous is $173100

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