owns an office building and land that are used in his trade or business. The office building and land were acquired in 1978 for

The question is incomplete, so I looked for a similar one online and found this one:

Chad owns an office building and land that are used in his trade or business. The office building and land were acquired in 1978 for $1,200,000 and $450,000 respectively. During the current year, the properties are sold for $1,650,000 with 35% of the selling price being allocated to the land. The assets as shown on the taxpayer's books before their sale are as follows:

Building $1,200,000

Accumulated depreciation $1,125,000

Land $450,000

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 due to the sale of the land?

a) recognized gain = sales price - book value = ($1,650,000 x 65%) - ($1,200,000 - $1,125,000) = $1,072,500 - $75,000 = $997,500

b) this gain should be recognized as along term capital gain since Chad owned the building and land for more than 1 year.

c) recognized gain = ($1,650,000 x 35%) - $450,000 = $577,500 - $450,000 = $127,500 ⇒ long term capital gain

land is not depreciable