Secs. 1231 and 1250-Real property placed in service before 1981.
Charles owns an office building and land that are used in his trade or business. The office building and land were acquired in 1978 for $800,000 and $100,000 respectively. During the current year, the properties are sold for $900000 with 20% of the selling price being allocated to the land. The assets are shown on the taxpayer's books before their sale for:
Building: 800,000
Accumulated Depreciation: 690,000 $110,000
Land $100,000
a) what is the recognized gain due to the sale of the building?
b) what is the character of the recognized gain due to the sale of the building?
c) what is the recognized gain and character of the gain on the sale of the land?