Berkeley Corporation has a policy of furnishing new automobiles to the athletic department of the local University. The automobiles are used for short periods of time by the extremely popular head basketball coach. When the automobiles are returned to Berkeley Corporation, they are sold to regular customers. The owner of Berkeley Corporation maintains that any such cars held for more than one year should qualify as Section 1231 property.

Research Issue

Should the owner of Berkeley Corporation qualify the automobiles as Section 1231 property? Tax consequences if it is allowed and the tax consequences if it is not allowed before coming to the conclusion