# Second determine the 1245 recapture potential this is

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Second, determine the § 1245 recapture potential: This is the lesser of \$589,765 (recognized gain) or \$89,765 (cost recovery claimed).Third, determine the § 1250 recapture amount: Cost recovery \$89,765 - straight-line cost recovery (\$89,765) = § 1250 ordinary income\$0.
2/19/2021CengageNOWv2 | Assignments | ViewFeedbackCheck My WorkCorrectSolutiona.Compute the amount of Aqua's recognized gain on the sale of the realty.Fourth, because the taxpayer is a corporation, determine the additional § 291 amount:§ 1245 recapture potential:\$89,765Less § 1250 recapture amount:\$0Excess § 1245 recapture potential:\$89,765Apply § 291 percentage:x 20%Additional ordinary income under §291:\$17,953As result the total gain of \$589,765 is recognized as follows:§ 1250 gain of \$0 which is treated as ordinary income.§ 291 gain of \$17,953 which is treated as ordinary income.§ 1231 gain of \$571,812 (\$589,765 - \$0 - \$17,953).
2/2No Check My Work uses2b.Determine the amount of the recognized gain that is treated as § 1231 gain and the amount that is treated as § 1250 recapture(ordinary income due to due to § 291).§ 1231 gain:\$571812§ 1250 recapture (ordinary income due to § 291):\$17953
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Term
Fall
Professor
Hawkins
Tags
Generally Accepted Accounting Principles, Depreciation recapture, Aqua Corporation