Chapter 3 Property Dispositions

Rayburn Corporation has a building that it bought during year 0 for $850,000. It sold the building in year 5. During the time it held the building Rayburn depreciated it by $100,000.

What is the amount and character of the gain or loss Rayburn will recognize on the sale in the following situation?

a) Rayburn receives $700,000

PLEASE READ: One of my answer is wrong and I don't know what the right answer is.****

Total Gain/(Loss) Recognized ($50,000) (CORRECT)

Ordinary Income - 291 depreciation recapture $0 (INCORRECT)****

1231 gain/loss ($50,000) (CORRECT)