1.Taxdepreciationfor years 1 - 3.

2.Assume that on Dec. 31, 20YR3, all assets were sold for a lump sum of $1.5M.

3.Calculate any gain or loss recognized on the sale of these assets.

4.For each asset, state the character of the gain/loss (e.g. ordinary Sec. 1245; capital Sec. 1231).

Asset Purchase Date Basis

Furniture (7-year) 1-Dec $350,000

Computer Equipment (5-year) 28-Feb $90,000

Copier (5-year) 15-Jul $30,000

Machinery (7-year) 22-May $480000

Total $950,000