Firm P, a non-corporate taxpayer, purchased residential realty in 1985 for $1 million. This year it sold the realty for $450,000. Through date of sale, Firm P deducted $814,000 accelerated depreciation on the realty. Straight-line depreciation would have been $625,000.
a. Determine the amount and character of Firm P’s recognized gain on sale.
b. How would your answer change if Firm P was a corporation?