Eleven years ago, Lynn Inc. purchased a warehouse for $315,000. This year, the corporation sold the warehouse to Firm D for $80,000 cash and Ds assumption of a $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-line depreciation on the warehouse.

a. Compute Lynns gain recognized on sale of the warehouse.

b. How much of this recognized gain is treated as capital gain and how much is ordinary?

c. How would your answers change if Lynn is a noncorporate business?