United Jersey Bank of Princeton purchased land and a building for the lump sum of $6.0 million. To get the maximum tax deduction, the bank's managers allocated 80% of the purchase price to the building and only 20% to the land. A more realistic allocation would have been 60% to the building and 40% to the land.
Required
1. Explain the tax advantage of allocating too much to the building and too little to the land.
2. Was United Jersey Bank's allocation ethical? If so, state why. If not, why not? Identify who was harmed.