A taxpayer purchased a factory building in 1985 for $800,000. After claiming ACRS-accelerated depreciation of $800,000, she sells the asset for $1,000,000 during the current year. No payment is received during the current year, and the $1,000,000 balance to be paid with interest at the interest rate in four annual payments beginning one year from date of sale. The installment sales method is
adopted. How much ordinary income is recognized in the current year?
A) $0
B) $200,000
C) $800,000
D) $1,000,000
C) $800,000
$800,000 of the $1,000,000 ($1,000,000 amount realized less $0 adjusted basis) gain is Sec. 1245 ordinary income and must be recognized in the year of sale.
You might also like to view...
An important key to success in permission marketing programs is to make sure participants have actually agreed to participate and not been tricked into participating or signed up without their knowledge
Indicate whether the statement is true or false
Federal income taxes withheld increase the employer's payroll tax expense
Indicate whether the statement is true or false
Automatic light control systems have been found generally to waste more energy than they save
Indicate whether the statement is true or false.
The filing of a petition for bankruptcy will automatically stay most legal actions against the debtor.?
Indicate whether the statement is true or false