Secs. 1231 and 1250 Placed in service after 1986
Molly, whose tax rate is 35%, sells an apartment complex for $4.5 million with 10% of the price allocated to land. The apartment complex was purchased in 1992. She has no other sales or exchanges during the year and no nonrecaptured net Sec. 1231 losses. Information about the assets at the time of sale is:
Original Cost of Building $2,700,000
Accumulated Depreciation $1,000,000
Original Cost of Land : $300,000

a)What is the recognized gain on the sale of the building and the character of the gain?
b) What is the recognized gain on the sale of the land and the character of the gain?
c) How much of the Sec 1231 gain is taxed at 25%?
d) If Molly has NSTCL of $50,000, will the capital loss reduce the Sec. 1231 gain taxed at 25% or 15%?