Ken sold a rental property for $858,000. He received $182,000 in the current year and $169,000 each year for the next four years. $617,500 of the sales price was allocated to the building and the remaining $240,500 was allocated to the land. Ken purchased the property several years ago for $614,500. When he initially purchased the property, he allocated $477,500 of the purchase price to the building and $137,000 to the land. Ken has claimed $13,900 of depreciation deductions over the years against the building.
If Ken had no other sales of §1231 or capital assets in the current year.
A. Determine the amount of Ken's total recognized gain or loss, and the character of the gain or loss.
- Recognized gain or loss $
- Ordinary Gain/(Loss) $0
- §1231 Gain/(Loss) $
- Unrecaptured §1250 Gain $
B. Calculate Ken's total tax due because of the sale (assuming his marginal ordinary tax rate is 35 percent). (Round your answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)