Assume That a Building Is Subject to § 1250 Depreciation

question 51

Multiple Choice

Assume that a building is subject to § 1250 depreciation recapture because bonus depreciation [§ 168(k) ] was used. The building is destroyed in a hurricane, which is the taxpayer's only casualty or theft for the year.In which of the following situations could there be a § 1250 depreciation recapture gain?

• A)There is a loss because the insurance recovery is less than the adjusted basis.
• B)There is a gain because the insurance recovery exceeds the adjusted basis.
• C)Because of the length of time the building has been held, there is no remaining additional depreciation.
• D)There is no insurance recovery and the adjusted basis of the building is greater than zero.
• E)None of these.

---

Definitions:

Grand Mal Seizure

A type of seizure characterized by a loss of consciousness and violent muscle contractions, known as a tonic-clonic seizure.

Malfunctioning Heating Pad

A heating pad that is not operating as intended, potentially not providing heat or operating unsafely.

Headaches

A common condition that involves pain or discomfort in the head, scalp, or neck.

Dizziness

A sensation of spinning or a feeling of imbalance, often related to disorders of the inner ear or the vestibular system.