1. 1. On October 1 of last year Rose Company, a calendar year C corporation, placed in service a $10,000,000 office building and allocated $4,000,000 of the cost to the land. On December 31 of the current year, Rose sold the office building for $12,000,000 and allocated $7,000,000 of the sales price to the building and the remaining $5,000,000 of the sales price to the land. How much of the $1231 gain is treated as capital gain in the current year?

2. Blue, Incorporated, a calendar year, accrual basis taxpayer, purchased equipment (7-year property) for $3,000,000 and placed it in service on October 1 of the current year. This was Blue's only depreciable property purchased during the year. Blue's taxable income is $800,000. Compute the maximum tax depreciation for the current year assuming Blue does not elect bonus depreciation.

3. In the current year, Joe sold stock to his brother Zach for $10,000. Joe purchased the stock two years ago for $15,000. Zach sold the stock to an unrelated party for $14,000. If Zach has $20,000 taxable income before the stock sale to an unrelated party, how much gain or loss did Zach recognize on the sale in the current year?