Beige Corporation, a C Corporation, Purchases a Warehouse on August

question 41

Multiple Choice

Beige Corporation, a C corporation, purchases a warehouse on August 1, 1996, for $1 million. Straight-line depreciation is taken in the amount of $411,750 before the property is sold on June 11, 2012, for $1.2 million. What is the amount and character of the gain recognized by Beige on the sale of the realty?

• A)Ordinary income of $0 and § 1231 gain of $611,750.
• B)Ordinary income of $411,750 and § 1231 gain of $200,000.
• C)Ordinary income of $82,350 and § 1231 gain of $529,400.
• D)Ordinary income of $117,650 and § 1231 gain of $494,100.
• E)None of the above.

---

Definitions:

Variable Costs

Expenses that vary in direct proportion to changes in production or sales volume, such as raw materials and direct labor costs.

Sales

Revenue generated from goods or services exchanged by an entity during its normal business operations.

Break-even Analysis

An assessment to determine the sales volume at which total revenues equal total costs, indicating no net loss or gain.

Cost-volume-profit Analysis

An accounting technique that analyzes how changes in costs, sales volume, and price affect a company's profit.