A friend of yours wants to become a client and start a new company, Cyberdyne Systems, specializing in AI research. In order to get seed money, she wants to sell a rental property she has owned for about 15 years. She inherited this property from her uncle, who owned the home for many years before dying. Below is the information about the property that has been derived from her tax returns.

• Cost of the house (in 1950) $35,000
• Value of the house at date of death (1995): $250,000
• Value at time placed into service as rental property (2005): $400,000
• Depreciation taken on the house: $140,000
• Sales price of the house: $800,000
• Expenses of selling the home: $50,000

What is the AB of the home at time of sale?

	a.	0
	b.	150,000
	c.	260,000
	d.	110,000

A friend of yours wants to become a client and start a new company, Cyberdyne Systems, specializing in AI research. In order to get seed money, she wants to sell a rental property she has owned for about 15 years. She inherited this property from her uncle, who owned the home for many years before dying. Below is the information about the property that has been derived from her tax returns.

• Cost of the house (in 1950) $35,000
• Value of the house at date of death (1995): $250,000
• Value at time placed into service as rental property (2005): $400,000
• Depreciation taken on the house: $140,000
• Sales price of the house: $800,000
• Expenses of selling the home: $50,000

Assuming there is 1245 gain, what is the tax rate on the gain?

	a.	3.8%
	b.	15%
	c.	Ordinary rates for the taxpayer
	d.	25%