Alejandro Purchased a Building in 1985, Which He Uses in His

question 816

Multiple Choice

Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the cost- recovery deduction for the building. Alejandro's original cost for the building is $500,000 and cost- recovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are

• A) $800,000 Sec. 1245 ordinary income.
• B) $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain.
• C) $500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income.
• D) $800,000 Sec. 1231 gain.

---

Definitions:

Epigenetics

The study of changes in organisms caused by modification of gene expression rather than alteration of the genetic code itself.

Gene Expression

The process by which the instructions in our DNA are converted into a functional product, such as a protein.

Genetics

The branch of biology concerned with the study of genes, genetic variation, and heredity in organisms.

Lemon Juice Test

A psychological test used to measure introversion and extroversion based on the saliva production in response to tasting lemon juice.