Marybelle Paid $400,000 for a Warehouse

Marybelle paid $400,000 for a warehouse. Using 39-year straight-line depreciation, Marybelle deducts $24,868 for the first two years of usage. At the beginning of the third year, Marybelle sells the warehouse for $380,000. What is the character of the gain.

A) Long-term capital gain.
B) Section 1250 gain.
C) Ordinary income.
D) Unrecaptured section 1250 gain.
E) Section 1245 gain.

Correct Answer:

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