1. Teton, a sole-proprietorship owned by Steve, bought its warehouse for $325,000, depreciated it $25,000, and sold it for $475,000. What is the amount of the gain Teton (and thus Steve) reports on the sale (recall that income of sole proprietorships is taxed directly to the owner of the business)?

2. What amount of the gain above is unrecaptured 1250 gain ?

3.Suppose Steves marginal ordinary tax rate is 35 percent, and he faces a preferential rate of 15 percent. What amount of tax will he pay on the gain (assuming no other asset dispositions)?