Question: Mark sold a building on June 15 for $100,000. Mark's income tax rate is 28%. He had acquired the building more than five years earlier for $75,000. Straight-line depreciation taken was $30,000. Calculate the Section 1250 gain and the long-term capital gain. At what rate is each gain taxed. (9 points)

Computation

100,000 Selling Price-45,000(Basis net of accumulated depreciation)=$55,000 long term capital gain Sec.1231 gain (long term capital gain)

No 1250 gain because Sec 1250 recapture is limited to the excess of accelerated depreciation over SL depreciation. The building was depreciated over SL depreciation not accelerated depreciation. The 55,000 long term capital gain is taxed at a rate of 15% because the taxpayer is between tax brackets 25%-35%.

Is this computation correct?