Philip Purchased an Apartment Building in 1997 for $1,000,000

question 29

Multiple Choice

Philip purchased an apartment building in 1997 for $1,000,000. During 2014, the building is sold for $800,000. The accumulated depreciation on the building as of the sale date was $300,000. What is the amount and character of the gain recognized on the sale?

• A) $100,000 Section 1250 ordinary income.
• B) $100,000 Section 1231 long term capital gain.
• C) $100,000 unrecaptured Section 1250 gain.
• D) $100,000 ordinary income.

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Definitions:

Island Arc

A curved series of volcanic islands that arise from the ocean floor, typically near a convergence zone between tectonic plates.

Lesser Antilles

A group of islands in the Caribbean Sea, forming part of the boundary between the Caribbean Sea and the Atlantic Ocean, located on the eastern edge of the Caribbean plate.

Transform Faults

Boundaries between tectonic plates where the motion is predominantly horizontal, leading to earthquakes but not creating volcanoes.

Gulf of Mexico

A large ocean basin near the southeastern coast of North America, bounded by the United States, Mexico, and Cuba, known for its rich biodiversity and significant oil reserves.