Ms. Aldo contributed an office building to Aldo Home Furnishings and Design, a C corporation, in exchange for 30 percent equity interest in the business. The company uses the building to house inventory and office space.

• After the contribution, Ms. Aldo has an 80% interest in the corporation.
• Her tax basis in the office building was $800,000 (building $500,000 and $300,000 land) and the buildings appraised FMV on date of contribution to the business was $1,000,000.

Ten years later, Ms. Aldo decided to retire on the last day of the year. The corporation sold the building to an unrelated purchaser for $1,500,000. A realtor was paid a 5 percent commission. The corporation will liquidate inventory shortly and the company may need your assistance at a later date.

Will the corporation have a recognized gain on the sale of the building? Explain using your understanding of realized versus recognized. Explain your understanding of each concept