Problem
On June 22, 2022, Hazel Corporation purchased and placed in service a new seven-year class asset costing $2,900,000. Hazel wants to expense the maximum amount available under § 179. Hazel elects NOT to take additional first-year depreciation. Assume taxable income is 900,000.
Be sure to show each and every calculation for maximum allowed credit!
i. Determine Hazel Corporation's maximum allowable total cost recovery for 2022. Label each element of depreciation/cost recovery you are taking.
ii. The asset was sold November 1, 2023. Determine Hazel Corporation's total cost recovery for 2023 for this asset.
iii. Determine Hazel Corporation's adjusted basis in the asset at the date of sale in 2023.
iv. If the selling price was $2,100,000, how much was the gain or (loss)? Be sure to indicate if gain or (loss).