Explain the tax advantage of allocating

Assignment Help Accounting Basics

Reference no: EM13759812

Western Bank & Trust purchased land and a building for the lump sum of $3,000,000. To get the maximum tax deduction, Western allocated 90% of the purchase price tot he building and only 10% to the land. A more realistic allocation would have been 70% to the building and 30% to the land.

Requirements

Explain the tax advantage of allocating too much to the building and too little to the land.
Was Western's allocation ethical? If so, state why. If not, why not? Identify who was harmed.

Instructions: Your initial response should be no less than 250 words with at least one scholarly journal reference (dictionary-type websites are excluded). In-text citations and references must be in APA format.

Reference no: EM13759812

Questions Cloud

Create a presentation describing the data types : Create a 10-12 slide presentation describing the data types. Include the following in your presentation: Introductory slide AND Slide for each data type

What is the estimated overall labor cost for a task : What is the estimated overall labor cost for a task that has a learning curve of 90% and is expected to reach steady state value after 16 units in a time of 5 minutes to assemble and the total production run is 20 units. Labor is $22 per hour. What w..

Company''s monthly net operating income or loss : The sales manager feels that an $18,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $120,000 increase in monthly sales. If the sales manager is right, what will be the effect..

Cost leadership strategy and quick-response strategy : Of the potential strategies available to Regal Marine, have they chosen differentiation, cost leadership, or quick response? Do you think that is a good choice for a boat manufacturer? Why or why not? Cost Leadership strategy and Quick-Response strat..

Explain the tax advantage of allocating : Explain the tax advantage of allocating too much to the building and too little to the land. Was Western's allocation ethical? If so, state why. If not, why not? Identify who was harmed.

The cost estimation to design a new aircraft : Boeing has developed the 787 for production in 2008*. It is expected to perform 20% more efficiently than any other plane. Assume the passenger load is similar to the Boeing 777 (which cost $6 billion to design and went into service in 1993). The BLS..

Obtained fixed and unit variable cost in formation : Jimbo Elrod has obtained fixed and unit variable cost in formation of four potential locations for his professional wrestling school and summarized it in the table below. All values are in dollars. Jimbo plans to charge the same amount for tuition re..

Calculate average cost per unit : Determine the cost of goods available for sale. Calculate average cost per unit. Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of th..

User Account

All Pages