Eric Purchased a Building in 2005 That He Uses in His

Multiple Choice

Eric purchased a building in 2005 that he uses in his business.Eric uses the straight-line method for the building.Eric's original cost for the building is $420,000 and cost-recovery deductions are $120,000.Eric is in the top tax bracket and has never sold any other business assets.If the building is sold for $560,000,the tax results are

A) $260,000 Sec.1231 gain,all taxable at 20%.
B) $260,000 unrecaptured Sec.1250 gain,all taxable at 25%.
C) $260,000 Sec.1231 gain,of which $120,000 is unrecaptured Sec.1250 gain taxable at 25% and the $140,000 balance is taxable at 20%.
D) $120,000 Sec.1245 ordinary income,$140,000 Sec.1231 gain taxable at 20%.