You are the accountant for the millenium corporation last

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You are the accountant for the Millenium Corporation. Last year the company purchased a $2,500,000 coporate jet to be used for executive travel. To help offset the cost of the airplane, your company occasionally rents the jet to the executives of two other corporations when it is not in use by Millenium.

When the coporate tax return was filed this year, you began depreciating the jet by using MACRS. Today you received a letter from the IRS informing you that because your company occasionally rents the airplane to others, it is considered a commercial aircraft and must be depreciated as such. The corporate lawyers are considering disputing this IRS ruling and have asked you the following questions:

a.) How much depreciation did you claim this year?

b.) Under the new category, how much depreciation would be claim?

c.) If the company pays 30% income tax, what effect will this change have on the amount of tax owed, assuming the company made a net profit this year?

Reference no: EM13378816

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