Mr and Mrs

Multiple Choice

Mr. and Mrs. Marley operate a small business. This year, the Marleys sold a commercial office building used in their business for $1.1 million. They purchased the building in 2006 for a cost of $900,000 and have deducted $300,000 MACRS depreciation through date of sale. The Marleys should characterize the $500,000 gain recognized on sale as:

A) Capital gain
B) Section 1231 gain
C) $300,000 ordinary gain and $200,000 Section 1231 gain
D) None of these choices are correct