Hammond Inc

Multiple Choice

Hammond Inc., sells a building that it purchased in 2001 for $1,500,000. The building cost $1,000,000 and had an adjusted basis of $700,000 at the date of the sale.
I.Hammond has an $800,000 Section 1231 gain on the sale.
II.Hammond must report $300,000 of Unrecaptured Section 1250 gain.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.