Jeff, you are right I do not understand section 1250 gains. I had a bad teacher in college and the becker book gives zero examples. I did some searching online and looked at your notes, and this is what I came up with. Please let me know if I am understanding this correctly.
1250 building pre-1986
sold $210,000 Accelerated dep $50,000 SL dep $40,000 Basis $200,000 Adjusted basis based on accelerated dep (200-50)=$150,000.
-Total gain (210-150)=$60,000 -1250 recaptured gain [accelerated-SL]: (50-40)=$10,000 taxed as ordinary.
-Remaining gain $60,000-$10,000=$50,000 1231 gain.
-Of which $40,000 (SL DEP) is unrecaptured 1250 taxed at 25% unless low income bracket;
-And remaining $10,000 is taxed as a 1231 gain 15%
-Any post 1986 property is 1231 gain, and if straight line is used NO 1250 it's all 1231.
Then for corporations section 291:
=recaptured 1250 gain $10,000 + 20% of $40,000 SL (8,000)= $18,000
Is that at all correct?
FAR 81, BEC 75, AUDIT 92 ,Reg 88
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