Monique is planning to increase the size of the manufacturing business that she operates as a sole proprietorship. She has a number of older assets that she will replace as part of the expansion. In addition, to finance this expansion she will have to sell some of her personal assets. Because it is close to the end of the tax year, she can time the sales of the assets to take the greatest advantage of the tax laws. Monique is currently in the 35 percent tax bracket.

Following are the assets that Monique plans to sell; assume that she will realize their fair market value on the sales:

Business AssetsAcquisitionFair MarketDepartmentAdjustedOriginal

DateValueMethodBasisCost

1.Truck19953,000MACRS0.0020,000

2.0/Bldg1990300,000MACRS160,000285,000

3.Machine 1 200010,000MACRS25,00080,000

4.Machine 2200160,000MACRS55,000 95,000

Personal AssetsAcquisition DateFair Market ValueOriginal Cost

1.Sculpture1991400,000260,000

2.Painting1998400,000525,000

3.100,000 Shares ACC2004800,0001,050,000

4.10,000 Shares BBL2006400,000350,000