Pedro Sells a Building for $170,000 in 2014

question 49

Multiple Choice

Pedro sells a building for $170,000 in 2014. He paid $145,000 for the building and it had an adjusted basis of $110,000 as of the sale date. I. If the building was purchased in 1993 and MACRS straight-line depreciation is used, $35,000 of the gain is recaptured under section 1250. II. If the building is an apartment building purchased in 1985, only the gain which is attributable to excess depreciation is recaptured as ordinary income under Section 1250. III. If the building was purchased in 1993, $35,000 of the gain is unrecaptured section 1250 gain, and $25,000 of the gain is a section 1231 gain.

• A) Statements I and II are correct.
• B) Statements II and III are correct.
• C) Statements I, II, and III are correct.
• D) Only statement III is correct.

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