Alpha and Beta have been members of an electing Federal consolidated group since the beginning of year 1. Also at the beginning of year 1, Alpha acquired and placed in service a fleet of trucks to be used in its business. The acquisition price was $1 million. Alpha used the 5-year MACRS tables to compute cost recovery deductions for the fleet; the depreciation percentages from the 5-year, mid-year convention MACRS table are listed below. Alpha did not claim any bonus depreciation for the fleet.

Year Depreciation Rate (%)

1 20 2 32 3 19.2 4 11.52 5 11.52 6 5.26 At the beginning of year 3, Alpha sold the fleet in full to Beta for $900,000. Alpha’s basis in the fleet on the date of the sale was $480,000; its realized gain on the sale totaled

$420,000. Provide the following information.

a. The recognized gain of the consolidated group in year 3 from the sale.

b. The consolidated group’s cost recovery deduction for the fleet in years 3 and 4.