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George bought Blackacre for $500,000. George put $50,000 in cash and the rest of the purchase is financed by a $450,000 nonrecourse loan. George claims

George bought Blackacre for $500,000. George put $50,000 in cash and the rest of the purchase is financed by a $450,000 nonrecourse loan. George claims $100,000 in depreciation deductions, 7 years later when Blackacre is worth only $400,000 George transfers Blackacre to Jerry who takes it subject to outstanding nonrecourse debt of $425,000. What are the tax consequences to George?

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