1. $90,000?

Avalon realizes a $34,000 gain on the sale.  The entire gain is recaptured as ordinary income:

Amount realized                                                   $  90,000

Adjusted basis ($150,000 – $94,000)              (56,000)

Gain on sale                                                         $  34,000

Section 1245 – Ordinary income                              34,000

Section 1231 gain                                       $    -0-        

1. $155,000?

Avalon realizes a $99,000 gain on the sale.  The $94,000 of depreciation is recaptured as ordinary income, leaving a $5,000 Section 1231 gain:

Amount realized                                                   $155,000

Adjusted basis ($150,000 – $94,000)              (56,000)

Gain on sale                                                         $  99,000

Section 1245 – Ordinary income                              94,000

Section 1231 gain                                       $    5,000

1. $40,000?

Avalon realizes a $16,000 loss on the sale.  The $16,000 loss is a Section 1231 loss — depreciation recapture applies only to gains:

Amount realized                                                   $  40,000

Adjusted basis ($150,000 – $94,000)              (56,000)

Loss on sale                                                         $ (16,000)