Firm WD sold depreciable realty for $225,000. The firm purchased the realty 12 years earlier for $350,000 and deducted $155,000 MACRS depreciation through date of sale. During an audit of the tax return on which the sale was reported, the IRS determined that WD had incorrectly computed its depreciation with respect to the realty. The correct depreciation through date of sale should have been $200,000.
Identify the tax issue or issues suggested by the following situations, and state each issue in the form of a question