Jeffery, the owner of a remodeling company and a sole proprietor, sold a commercial building he used in his business. He acquired the building on February 15, 2013 for $420,000 and sold it December 30, 2016, for $480,000. Jeffery had taken $41,294 in depreciation. Assume Jeffery is in the 39.6% tax bracket and no other assets were sold in 2016.
a) What is the adjusted basis of the building?
b) What is the amount gain on the sale of the building?
c) How much of the gain is considered unrecaptured 1250 gain?
d) How much of the gain is considered a capital gain?
e) Calculate the tax on the unrecaptured 1250 gain.
f) Calculate the tax on the gain considered to be capital in nature.