Aqua Corporation purchases nonresidential real property on May 8, 2016, for $1,000,000. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 27, 2019, for $1,500,000.
a. Compute the amount of Aqua’s recognized gain on the sale of the realty.
b. Determine the amount of the recognized gain that is treated as § 1231 gain and the amount that is treated as § 1250 recapture (ordinary income).