A commercial property was purchased for $185,000 and has been depreciated to a $61,000 book value. When the property was sold for $163,000, there is a:

The taxable gain from the sale of the commercial property is calculated by taking the difference between the selling price and the adjusted basis (which is the original purchase price minus depreciation).

In this case, the property was purchased for $185,000 and depreciated to a book value of $61,000. When the property is sold for $163,000, the first step is to determine the adjusted basis, which is the book value after depreciation. The adjusted basis is $61,000.

Next, we calculate the taxable gain by subtracting the adjusted basis from the selling price:

Selling Price: $163,000 Adjusted Basis: $61,000

Taxable Gain = Selling Price - Adjusted Basis Taxable Gain = $163,000 - $61,000 Taxable Gain = $102,000

Thus, the correct answer reflects a taxable gain of $102,000. This demonstrates how the financial outcome of the transaction is influenced by both the purchase price and accumulated depreciation, culminating in the final taxable amount recognized on the sale. Understanding this process is crucial for accurately reporting property transactions in real estate.