A wholesale business with a December 31 year end purchased new equipment on November 25, 20X0, for $10,000. Before 20X0, the business owned no other equipment.
Required:
1. What are the tax consequences if in 20X2 the business sells the equipment for (a) $3,000? (b) $8,000? (c) $12,000?
2. How would your answer to (a) and (b) change if on December 31, 20X2, the business acquired new equipment costing $1,000? Would it be advisable to delay the purchase by one day (that is, until January 1, 20X3)?