the tax is correct. cost $400 less depreciation of $60 = tax basis $340 sold for $ $600 so gain is $260 of which the depreciation recapture of $60K is taxed at 25%. the remaining $200 is taxed at capital gain rates. or put another way your capital gain is $260 but the portion that represents depreciation recapture is tax at 25% and only the remaining capital gain of $200 is tax at capital gain rates. in addition, your investment income may be high enough, so you are subject to some net investment income tax (NIIT). see if there is form 8960 where it is computed.
