The Dragon Corporation owns a G550 Airplane that it uses as a business asset (similar to other depreciable assets). The plane was purchased in 2005 for $42,000,000 for cash. The airplane was depreciated over 5 years for tax purposes (For tax purposes, Airplanes have a tax life of 5 years). Since the airplane was purchased, it was used 80% for business and 20% for personal use each year. The year is now 2012. Dragon Corporation wants to sell the G550 Airplane and purchase a new G650 Airplane. They have found a purchaser willing to pay $31,000,000 for the G550. The purchase price of the new airplane is $60,000,000. They have taken the necessary steps to do a Like Kind exchange (LKE) on the airplane if they want to. The new airplane qualifies for 100% bonus depreciation in the first year it is placed in service. In 2012, since they will purchase the new airplane in December, the airplane will be used 100% for business. Note> Mid-Qtr convention is not applicable since they are able to take 100% bonus depreciation. Questions (please show all work and support answers with applicable IRC code section(s)) 1. What is the realized tax gain on the sale of the G550? 3 points 2. If Dragon Corporation does a LKE, what is the basis of the new G650? 4 Points 3. Define what a LKE is. What is the IRC code section that allows LKE? What are the general rules allowing for property to qualify for a LKE? 3 Points 4. Is it better for Dragon to do a LKE and defer the gain? Why or why not - show calculations that support your conclusion (getting the correct answer without proper support will only result in 3 points). 10 Points Questions (please show all work and support answers with applicable IRC code section(s)) What is the realized tax gain on the sale of the G550? 3 points If Dragon Corporation does a LKE, what is the basis of the new G650? 4 Points Define what a LKE is. What is the IRC code section that allows LKE? What are the general rules allowing for property to qualify for a LKE? 3 Points Is it better for Dragon to do a LKE and defer the gain? Why or why not - show calculations that support your conclusion (getting the correct answer without proper support will only result in 3 points). 10 Points