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fall_2009_part_3_property_transactions - TAX 6845 Tax...

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TAX 6845 – Tax Planning and Consulting Case Part 3: Property transactions (20 points) To be completed in small groups 2-3 due date: October 13, 2009 It is January 3, 2009 and BHN (an accrual basis taxpayer) has been operating successfully for several decades. BHN owns a warehouse, which they no longer use because of its out-of-the-way location. Facts relative to the warehouse are: Land cost $ 80,000 Warehouse cost 270,000 Less: Accumulated depreciation (69,228) Adjusted basis $ 280,772 The warehouse was acquired in January 1999 and 10 years of depreciation has been previously deducted using a 39 year recovery period. For simplicity, assume that is 2.564% per year and ignore any cost recovery in the year of disposal. Assume that it has a remaining useful life of 20 years, but a remaining recovery period of 29 years. Steve Stumberg says they have found four unrelated taxpayers who are interested in the warehouse. If BHN disposes of the warehouse it will acquire another warehouse in a more convenient location.
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