The TP owned an office building that had been held more than one year when it was sold for $567,000. The real estate had an adjusted basis of $45,000 for the land and $233,000 for the building. Straight-line depreciation of $162,000 had been taken on the building. What is the amount and initial character of the gain or loss from disposition of the real estate? Is any of the gain unrecaptured § 1250 (25%) gain?
A resident of St. Paul, Minnesota, wishes to retire in Sun City, Arizona. He owns a motel that has a current market value of $150,000. During his years of ownership of this motel he has taken $60,000 in allowable straight line depreciation. His current adjusted basis for the motel is $90,000. He has advertised the motel for sale and has received the following offers:
Offer No. 1: $150,000 in cash
Offer No. 2: An even exchange for a motel located in Sun City with a fair market value of $150,000.
Offer No. 3: An even exchange for Ford Motor Company stock with a fair market value of $150,000.
Mr. Green seeks your advice as to the tax consequences attached to each offer. Assume that he will no other sale of business assets or capital assets during the year. What is your advice?