EzTech, a calendar year accrual basis corporation, generated $994,300 ordinary income from its business this year. It also sold the following assets, all of which were held for more than 12 months.

EzTech used the straight-line method to calculate depreciation on the warehouse and has no non-recaptured Section 1231 losses.
a. Compute EzTech€™s taxable income.
b. Re-compute taxable income assuming that EzTech used the land in its business instead of holding it for investment.

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Initial BasisC. Depr. Sale Price Machinery Office equipment Warehouse Investment securities Investment land S 97,500 50,000 163,500 72,700 350,000 $39,660 12,470 21,620 n/a n/a $ 70,000 57,500 125,000 83,100 328,000