Hart, an individual, bought an asset for $500,000 and has claimed $100,000 of depreciation

deductions against the asset. Hart has a marginal tax rate of 32 percent. Answer the questions

presented in the following alternative scenarios (assume Hart had no property transactions other than those described in the problem):

a. What are the amount and character of Harts recognized gain or loss if the asset is

tangible personal property sold for $450,000? What effect does the sale have on

Harts tax liability for the year?

b. What are the amount and character of Harts recognized gain or loss if the asset is

tangible personal property sold for $550,000? What effect does the sale have on

Harts tax liability for the year?

c. What are the amount and character of Harts recognized gain or loss if the asset is

tangible personal property sold for $350,000? What effect does the sale have on

Harts tax liability for the year?

d. What are the amount and character of Harts recognized gain or loss if the asset is a

nonresidential building sold for $450,000? What effect does the sale have on Harts

tax liability for the year?

e. Now assume that Hart is a C corporation. What are the amount and character of its

recognized gain or loss if the asset is a nonresidential building sold for $450,000?

What effect does the sale have on Harts tax liability for the year (assume a 21

percent tax rate)?

f. Assuming that the asset is real property, which entity type should be used to minimize

the taxes paid on real estate gains?