During 1993,Trump Corporation Bought a Factory Building for $500,000

question 53

Multiple Choice

During 1993,Trump Corporation bought a factory building for $500,000.It deducted $180,000 of cost recovery deductions using straight-line depreciation while the building was in service.Trump sells the building in 2013 for $500,000.What are the tax consequences of the sale? (Do not consider Trump's other transactions) .

• A)$180,000 Section 1231 gain.
• B)$180,000 unrecaptured Section 1250 gain.
• C)$180,000 recaptured under Section 1245.
• D)$180,000 Section 1250 gain
• E)$ 90,000 Section 1231 income; and $ 90,000 ordinary income, recaptured under Section 1250.

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Definitions:

Periodic Inventory System

A method of inventory valuation for financial reporting purposes where a physical count of the inventory is taken at specific intervals.

Perpetual Inventory System

An inventory management approach where transactions are recorded in real-time, immediately affecting the inventory account.

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the goods once they are shipped, and must pay for the shipping costs.

FOB Destination

A shipping term indicating that the seller is responsible for the goods and transportation costs until the buyer receives the items.