Aneta sold an apartment building for $713,470 in 2019. She purchased the building in 2013 for $600,000 and has taken $151,806 in depreciation on the building. Assuming Aneta is married with regular taxable income of $500,000 and in the 35% tax bracket, how is her gain taxed?

a. $113,470 at 0% and $151,806 at 28%.

b. $113,470 at 25% and $151,806 at 15%.

c. $151,806 at 28% and $113,470 at 15%.

d. $151,806 at 25% and $113,470 at 15%.

(d). 151,806 at 25% and $113,470 at 15%

Explanation:

Book Value of apartment building = Cost of acquisition less accumulated depreciation claimed till date by the assessee

Cost Of Acquisition $600,000

Less: Depreciation till date ($151,806)

Book Value in 2019 448,194

Calculation of Long Term Capital Gain:

Sales Consideration $713,470

Less: Book value on date of sale ($448,194)

Long Term Capital Gain $265,276

The break up of above long term capital gain taxation would be as follows

$113470 at 15%

$ 151806 at 25%