Answered: An apartment building was acquired in…

An apartment building was acquired in 2013. The depreciation taken on the building was $189,260, and the building was sold for a $56,778 gain. What is the maximum amount of 25% gain?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 35CE

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Exercise 17-26 (Algorithmic) (LO. 4)
An apartment building was acquired in 2013. The depreciation taken on the building was $189,260, and the building was sold for a $56,778
gain.
What is the maximum amount of 25% gain?

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