1. Mr. Albert has a piece of property he has used in his business for 25 years. He is moving...
1. Mr. Albert has a piece of property he has used in his business for 25 years. He is moving his business across the country and needs to get rid of the real estate he currently owns, as he won't be close enough to keep an eye on it. He bought the land many years ago for $350,000, but now it is worth $1,500,000. He would prefer not to pay any taxes this year on the gain of the land, because he needs the money from the sale to reinvest in new property in the new business location! Do you have any advice for him? Explain.
2. Brienne owns a successful business and has placed $2,005,000 worth of assets into service for the current year so far. She meets with you on December 15th of the current year. She received payment from a large contract last week, and is planning to invest the $2,100,000 payment into qualified improvement assets that do not qualify for bonus depreciation. The assets would qualify for 179 or MACRS. You have calculated that the business will have $4,000,000 in taxable income this year. The business is very stable, calendar-year company, and is projected to have similar amounts of income in future years. Your client wants to minimize taxes every year. As her tax advisor, please write some advice regarding her purchases. Explain her options, and why you made your suggestion.