Kristine owns all of the stock of a C corporation which owns the following assets:

* Potential § 1245 recapture of $30,000.
** Straight-line depreciation was used.
Her adjusted basis for her stock is $270,000.Calculate Kristine's recognized gain or loss and classify it as capital or ordinary if she sells her stock for $470,000.
A)$200,000 ordinary income.
B)$200,000 capital gain.
C)$100,000 ordinary income and $100,000 capital gain.
D)$90,000 ordinary income and $110,000 capital gain.
E)None of the above.

Question

Kristine owns all of the stock of a C corporation which owns the following assets:

* Potential § 1245 recapture of $30,000.
** Straight-line depreciation was used.
Her adjusted basis for her stock is $270,000.Calculate Kristine's recognized gain or loss and classify it as capital or ordinary if she sells her stock for $470,000.
A)$200,000 ordinary income. 
B)$200,000 capital gain. 
C)$100,000 ordinary income and $100,000 capital gain. 
D)$90,000 ordinary income and $110,000 capital gain. 
E)None of the above.

Quizplus · Accepted Answer

The sale of the stock is treated as the sale of a capital asset.Thus,Kristine has a recognized gain of $200,000 ($470,000 - $270,000)which is classified as a capital gain.

Kristine Owns All of the Stock of a C Corporation