What are the tax status of the property to the corporation

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Reference no: EM13937227

Dedriea contributes to her wholly owned corporation some tangible personal property that she had used in her sole proprietorship business and depreciated. She had acquired the property for $566,000 and had taken $431,000 of depreciation on it before contributing it to the corporation. At the date of the contribution, the property had a fair market value of $289,000. The corporation took $100,000 of depreciation on the property and then sold it for $88,000 in 2015.

What are the tax status of the property to the corporation and the nature of the recognized gain or loss when the corporation sells the property?

a. The property had an adjusted basis of ($?$) at the date of contribution. The corporation ( has / does not have ) a carryover of Dedriea's depreciation recapture potential.

b. The property had an adjusted basis of ( $?$) at the time of its sale. When the corporation sells the property, the ( $?$) gain is all recaptured as ( ordinary income or § 1231 gain) by § 1245.

Reference no: EM13937227

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