Note the parking lot and shed will fall under section

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Unformatted text preview: Platt owns land that is operated as a parking lot. A shed was erected on the lot for the related transactions with customers. With regard to capital assets and Section 1231 assets, how should these assets be classified? a. b. c. d. Land Capital Section 1231 Capital Section 1231 Shed Capital Capital Section 1231 Section 1231 CPA-02061 Explanation Choice "d" is correct. Because the parking lot and the shed constitute real estate and depreciable assets used in a trade or business, they are not capital assets per the definition below. Note: The parking lot and shed will fall under Section 1231 (provided they are used in the business over 12 months) and possibly Section 1250 and 1245, respectively, upon sale of the assets. Capital assets are defined as all property held by the taxpayer except: 1. Property normally included in inventory or held for sale to customers in the ordinary course of business. 2. Depreciable property and real estate used in business. 10 © 2009 DeVry/Becker Educational Development Corp. All rights re...
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