Question

William sold Section 1245 property for $25,000 in 2019. The property cost $38,500 when it was...

William sold Section 1245 property for $25,000 in 2019. The property cost $38,500 when it was purchased 5 years ago. The depreciation claimed on the property was $19,200.

c. Calculate the amount of ordinary income under Section 1245.

$

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Answer #1
Cost of Property 38500
Less: Depreciation claimed 19200
Adjusted basis of Property 19300
Sales value 25000
Less: Adjusted basis of Property 19300
Total gain on sale 5700
Lesser of Depreciation claimed or Actual gain would be classified as Ordinary income.
The Lesser of Depreciation claimed or Actual gain is $5700 that would be classified as Ordinary income.
The amount of ordinary income under Section 1245 = $5700
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