kennedymarihllisgu68742Lv1

6 Jan 2023

United States tax law

BigDots Corp. purchased a machine for 51,000,000 in year 4 which is a high profitable year. In order to maximize the depreciation expense, BigDots claimed the maximum amount of $179 expense. As a result of heavy depreciation in Year 4 and 5, the machine had a adjusted basis of $200.000 in Year  6. Had only MACRS depreciation been taken on the property, its adjusted basis at the time of sale would have been 5800.000. Please determine how much of the realized gain should be reported as ordinary gain if the machine was sold for $930,000 in year 6.