Scenario 2: Six years ago, Mr. Khan contributed ar ffice building to Persian Rug Inc. in exchange for 25 perc nt equity interest in the business. Since the contribution, Persian Rug Inc. has used the building to house their inventory and offices. After this contribution, he has 85% interest in the corporation. His tax basis in the office building was $500,000 and the building's appraised FMV on date of contribution to the business was $675,000. This year, Persian Rug, Inc. sold the building to an unrelated purchaser for $800,000. Mr. Khan is planning on retiring soon and will eventually sell the business. 1. Based on the factors above, did Mr. Khan have a recognized gain on the contribution of the office building to Persian Rug Inc.? What was the corporation's basis in the property immediately after the contribution? 2. Review IRC section 351 to assist in answering #1 above. 3. Considering that the building would be depreciable property, determine the adjusted basis of the property at on the date of sale. You will need to consult the depreciation tables. Assume that the contribution of the property to the corporation was made on the first day of the year and the corporation's sale of the property was made on the last day of the year (six years later). 4. Determine the gain on the sale of the property and the amount of tax that the corporation will be required to pay