Vanna Owned an Office Building That Had Been Held More

question 35

Essay

Vanna owned an office building that had been held more than one year when it was sold for $567,000. The real estate had an adjusted basis of $45,000 for the land and $233,000 for the building. Straight-line depreciation of $162,000 had been taken on the building. What is the amount and initial character of the gain or loss from disposition of the real estate? Is any of the gain unrecaptured § 1250 (25%) gain?

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Definitions:

Nominal Wages

The wages paid to employees measured in current money and not adjusted for inflation, reflecting the face value of earnings.

Labor Markets

Economic markets in which labor services are bought and sold, including the supply of labor by households and the demand for labor by firms.

Indexation

The automatic correction by law or contract of a dollar amount for the effects of inflation

Time Inconsistency

The tendency of people to change their plans or decisions over time in ways that they might not have predicted or considered optimal originally.