In $2023,$ Malcolm decided to sell all of the business assets he had been using in his sole proprietorship. He had owned and used the assets in his business for several

years.

The business sale agreement specified that $$280,000$ of the $$400,000$ total sales price was allocable to a commercial building, and $$20,000$ was allocable to the land to

which the building is attached. Malcolm had purchased the property several years ago, and he used it exclusively for business purposes during the period he owned it$.$

Assuming Malcolm has a gain from the sale of his business assets, how will the gain from the sale of the land be treated for tax purposes?

It will be taxed at the tax rates that apply to: