Octet Corporation placed a small storage building in service in 2001.Octet's original cost for the building is $800,000 and the cost recovery deductions are $300,000.This year the building is sold for $1,100,000.The amount and character of the gain are
A)ordinary gain of $60,000 and Sec.1231 gain of $540,000.
B)ordinary gain of $300,000 and Sec.1231 gain of $300,000.
C)ordinary gain of $600,000.
D)Sec.1231 gain of $600,000.

Question

Quizplus · Accepted Answer

A)
 11ea7cb8_54d4_08e5_928c_a5d07f051b1e_TB1258_00 The Sec.291 recapture equals 20% of the recapture that would have been required if Sec.1245 had applied less the amount recaptured under Sec.1250 [20% of (300,000 - 0)].

Octet Corporation Placed a Small Storage Building in Service in 2001.Octet's