ACC – Stella Clay, Inc. purchased a manufacturing plant

Stella Clay, Inc. purchased a manufacturing plant for $1 million and made $500,000 in improvements. A few years later it constructed a child care facility in the plant for $200,000 and took an employer-provided child care credit with respect to those expenditures. Over the next 5 years, it spent $300,000 on operating expenses and took an employer provided child care credit for those expenditures. In the sixth year after opening the child care facility, Stella sold the manufacturing plant (including the child care facility), and the buyer refused to assume liability for any recapture tax. As of the date of the sale, Stella had taken $250,000 in depreciation deductions. If the amount realized from the sale is $1,750,000, compute the amount and character of the corporation’s gain or loss on the sale.Textbook: Principals of Business Taxation – 2013 edition