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. Below is the information derived from her tax returns, which she inherited from her uncle, who

owned the home for many years before dying (50 Pts).

• Cost of the House (in 1995) $200,000
• Value at time placed into service as rental property (2003): $250,000
• Depreciation taken on the house: $150,000
• Sales price of the house: $525,000
• Expenses of selling the home: $25,000
• Additional Assets for the home and their required information (All assets were put into service after the rental property was established and all items will go to the new owner):

Asset	Purchase Price	Accumulated Dep	MACRS Life
Refrigerator	$2500	$2000	5 Years
Water Heater	$700	$200	27.5 Years
Stove	$1200	$1200	5 years
New Bathroom Improvement	$35,000	$12,000	27.5 Years

Using the above questions, answer the questions below:

What is the AR for the sale of the entire property?

What is the AB for the entire property?

Provide an allocation Excel for the AR and AB for each property and calculate the entire gain on the sale of this property into the following categories:

• 1231 Gain
• 1245 Gain
• 1250 Gain