Beige Corporation, a C Corporation, Purchases a Warehouse on August

question 15

Multiple Choice

Beige Corporation, a C corporation, purchases a warehouse on August 1, 1998, for $1 million. Straight-line depreciation is taken in the amount of $411,750 before the property is sold on June 11, 2014, for $1.2 million. What is the amount and character of the gain recognized by Beige on the sale of the realty?

• A) Ordinary income of $0 and § 1231 gain of $611,750.
• B) Ordinary income of $411,750 and § 1231 gain of $200,000.
• C) Ordinary income of $82,350 and § 1231 gain of $529,400.
• D) Ordinary income of $117,650 and § 1231 gain of $494,100.
• E) None of the above.

---

Definitions:

Marginal Cost

The additional expense associated with manufacturing one extra unit of a product, emphasizing the cost variation.

Marginal Revenue

The additional income that is generated by selling one more unit of a product or service.

Loss Minimization

A strategy in economics and business focused on reducing the losses incurred by a firm or individual to the lowest possible level.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the cost per unit of output.