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Southern Bank & Trust purchased land and a building for the lump sum of $2,000,000. To get the maximum tax deduction, Southern allocated 90% of
Southern Bank & Trust purchased land and a building for the lump sum of $2,000,000. To get the maximum tax deduction, Southern allocated 90% of the purchase price to the building and only 10% to the land. A more realistic allocation would have been 60% to the building and 30% to the land. Explain below the tax advantage of allocating too much to the building and too little to the land.
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