Octet Corporation placed a small storage building in service in 2002. Octet's original cost for the building is $800,000 and the cost recovery deductions are $300,000. This year the building is sold for $1,100,000. The amount and character of the gain are

A) ordinary gain of $60,000 and Sec. 1231 gain of $540,000.
B) ordinary gain of $300,000 and Sec. 1231 gain of $300,000.
C) ordinary gain of $600,000.
D) Sec. 1231 gain of $600,000.


A) ordinary gain of $60,000 and Sec. 1231 gain of $540,000.







The Sec. 291 recapture equals 20% of the recapture that would have been required if Sec. 1245 had applied less the amount recaptured under Sec. 1250 [20% of (300,000 - 0)].

Business

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