Answer:
Bateman Corporation
a. The amount of the gain = $402,250.
b. The character of the gain is long-term capital gain.
Explanation:
a) Data and Calculations:
Sale proceeds from office building = $800,750
Purchase cost of building = $599,625
Period of building before sale = 10 years
Depreciation claimed on building = $201,125
Net book value of building = $398,500 ($599,625 - $201,125)
Capital gain on sale of building = $402,250 ($800,750 - $398,500)
b) Bateman Corporation will record a capital gain of $402,250. This is the difference between the sale proceeds from the building and the net book value of the building after deducting the depreciation expenses claimed on the building. It is a long-term capital gain, which is taxed under the reduced rate.
