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Frame Company sells an apartment building for $200,000, of which $40,000 is allocated to the land under the building. Frame had acquired the property for
Frame Company sells an apartment building for $200,000, of which $40,000 is allocated to the land under the building. Frame had acquired the property for $115,000 eight years earlier. At that time, $15,000 of the purchase price was allocated to the land. Frame took MACRS depreciation of $40,085. Frame Company has the following as a result of the sale:
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- $105,085 Code Sec. 1231 gain
- $105,085 ordinary income
- $4,017 ordinary income and $101,068 Code Sec. 1231 gain
- $20,085 ordinary income and $81,000 Code Sec. 1231 gain
- None of the above is within $400 of the correct answer
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