Cost recovery and Sec. 1245 recapture. The Bruin Corporation purchased new equipment (7year MACRS property, 2-year...

 

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Cost recovery and Sec. 1245 recapture. The Bruin Corporation purchased new equipment (7year MACRS property, 2-year convention) on September 12, 2017 for $2,300,000. In order to minimize their current period taxes Bruin elected to deduct the maximum amount allowed in 2017. Required: (a) Compute Bruin's total cost recovery deduction for 2017. (b) Bruin sold the equipment on December 7, 2020. Compute the amount and character of the gain/loss in each of the following independent situations. (1) Selling price = $300,000 (2) Selling price = $475,000 (3) Selling price = $2,400,000 (c) Comment on your results to part (b). What is unusual about case 3 (selling price $2.4M)? (d) How would your answers to part b (1-3) change, if Bruin bought the equipment on September 30, 2017. Cost recovery and Sec. 1245 recapture. The Bruin Corporation purchased new equipment (7year MACRS property, 2-year convention) on September 12, 2017 for $2,300,000. In order to minimize their current period taxes Bruin elected to deduct the maximum amount allowed in 2017. Required: (a) Compute Bruin's total cost recovery deduction for 2017. (b) Bruin sold the equipment on December 7, 2020. Compute the amount and character of the gain/loss in each of the following independent situations. (1) Selling price = $300,000 (2) Selling price = $475,000 (3) Selling price = $2,400,000 (c) Comment on your results to part (b). What is unusual about case 3 (selling price $2.4M)? (d) How would your answers to part b (1-3) change, if Bruin bought the equipment on September 30, 2017.

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Quiz a The Bruin Corporation purchased new equipment 7year MACRS property 12year convention on September 12 2017 for 2300000 In order to minimize thei... View the full answer