Residential Real Estate Was Purchased in 2014 for $345,000, Held

question 61

Essay

Residential real estate was purchased in 2014 for $345,000, held as rental property, and depreciated straight-line. Assume the land cost was $45,000 and the building cost was $300,000. Depreciation totaled $34,089. The building and land were sold on June 10, 2017, for $683,000 total. What is the tax status of the property, the nature of the gain from the disposition, and is any of it § 1250 depreciation recapture gain or unrecaptured § 1250 gain?

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Definitions:

National Income

The total value of all income earned by a nation's residents and businesses, including wages, rent, interest, and profits.

NDP

Net Domestic Product, which represents the total value of all goods and services produced within a country in a specific period, minus depreciation.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country's borders, serving as a broad measure of economic activity.

Depreciation

is an accounting method of allocating the cost of a tangible asset over its useful life to account for declines in value.