Question

Sally acquired an apartment building 15 years ago for $150,000 and sold it for $410,000 in the current year. At the time of the sale, there is $65,000 of accumulated straight-line depreciation on the apartment building. Assuming Sally is in the 32 percent tax bracket for ordinary income, how much of her gain is taxed at 15 percent?

Answer 1

Capital gain taxed @ 15% = $260000

Step-by-step explanation:

given data

Cost of Building = $150,000

sold = $410,000

accumulated depreciation = $65,000

tax bracket = 32 %

to find out

how much of her gain is taxed at 15 percent

solution

first we get here gain on sale that is express as

gain on sale = sold + Accumulated Depreciation - Cost of Building ..............1

gain on sale = $410,000 + $65,000 - $150,000

gain on sale = $325000

and

Unrecaptured depreciation of taxed @ 25% is = $65000

so Capital gain taxed @ 15% is = $325000 - $65000

Capital gain taxed @ 15% = $260000