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27 February, 08:31

Sally acquired an apartment building 15 years ago for $150,000 and sold it for $410,000 in the current year. At the time of the sale, there is $65,000 of accumulated straight-line depreciation on the apartment building. Assuming Sally is in the 32 percent tax bracket for ordinary income, how much of her gain is taxed at 15 percent?

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  1. 27 February, 08:46
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    Capital gain taxed @ 15% = $260000

    Explanation:

    given data

    Cost of Building = $150,000

    sold = $410,000

    accumulated depreciation = $65,000

    tax bracket = 32 %

    to find out

    how much of her gain is taxed at 15 percent

    solution

    first we get here gain on sale that is express as

    gain on sale = sold + Accumulated Depreciation - Cost of Building ... 1

    gain on sale = $410,000 + $65,000 - $150,000

    gain on sale = $325000

    and

    Unrecaptured depreciation of taxed @ 25% is = $65000

    so Capital gain taxed @ 15% is = $325000 - $65000

    Capital gain taxed @ 15% = $260000
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