Azona Corporation (a calendar-year taxpayer) purchased only one business asset during the year, 7-year used property that cost $2,600,000. Compute Azona’s depreciation for current year assuming that

Azona Corporation (a calendar-year taxpayer) purchased only one business asset during the year, 7-year used property that cost $2,600,000. Compute Azona’s depreciation for current year assuming that

a. the asset was purchased and placed in service on September 30.

b. the asset was purchased and placed in service on October 1.

35.  On March 1, Harry Corporation (a calendar-year taxpayer) purchased and placed in service office furniture costing $550,000. Compute the maximum amount Harry Corporation can elect to expense under Section 179 for this furniture if

Chapter 8

5. What types of assets are Section 1231 assets? What types of assets are capital assets? What types of assets are ordinary income assets? Give several examples of each type of asset.

25. Allan received $5,000 cash and an auto worth $15,000 in exchange for land encumbered by a $13,000 liability that the buyer assumed.

a. What is the amount realized on this sale?

b. If Allan had a basis of $34,000 in the land, what is his realized gain or loss on the sale?

c. If Allan has owned the land for five years as an investment, what is the character of the recognized gain or loss?

d. How would your answer to (c) change if the land had been used by Allan’s business as a parking lot?

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