On January 1, 2023 Obama Corporation purchased and placed into service 7-year property costing $100,000. On December 31, 2025 Obama sold the property for $102,000 after having taken $47,525 in depreciation deductions. What amount of the gain should Obama recapture as ordinary income?

Monroe Inc. purchased furniture (7-year property) on April 20, 2022 with a basis of $20,000 and used the mid-quarter convention. On December 15, 2025 (the fourth year) Monroe disposed of the property. Calculate the maximum depreciation expense for 2025 (ignore §179 and bonus depreciation).Half-Year Convention Year 4: 5-year 11.52%; 7-year 12.49%. Mid-Quarter Convention Quarter 1 Year 4: 5-year 11.01%; 7-year 10.93%. Mid-Quarter Convention Quarter 2 Year 4: 5-year 11.37%; 7-year 11.97%. Mid-Quarter Convention Quarter 3 Year 4: 5-year 12.24%; 7-year 13.02%. Mid-Quarter Convention Quarter 4 Year 4: 5-year 13.68%; 7-year 14.06%

Polk Inc. generated over $10,000,000 in taxable income in 2025. Polk made one asset purchase: new manufacturing equipment costing $3,904,800. The equipment has a 7-year recovery period and was placed in service on June 14. Assuming that Polk made the maximum §179 election with respect to the equipment, compute Polk’s 2023 cost recovery deduction ignoring bonus depreciation.Half-Year Convention Year 1: 5-year 20.00%; 7-year 14.29%. Mid-Quarter Convention Quarter 1 Year 1: 5-year 35.00%; 7-year 25.00%. Mid-Quarter Convention Quarter 2 Year 1: 5-year 25.00%; 7-year 17.85%. Mid-Quarter Convention Quarter 3 Year 1: 5-year 15.00%; 7-year 10.71%. Mid-Quarter Convention Quarter 4 Year 1: 5-year 5.00%; 7-year 3.57%

Millard Company purchased $4,413,000 of new business equipment (7-year property) on July 10, 2025. This was Millard’s only asset purchase in 2025. Assume Millard made the maximum §179 election with respect to the equipment. Compute Millard’s total tax depreciation for this 7-year property ignoring bonus depreciation.Half-Year Convention Year 1: 5-year 20.00%; 7-year 14.29%. Mid-Quarter Convention Quarter 1 Year 1: 5-year 35.00%; 7-year 25.00%. Mid-Quarter Convention Quarter 2 Year 1: 5-year 25.00%; 7-year 17.85%. Mid-Quarter Convention Quarter 3 Year 1: 5-year 15.00%; 7-year 10.71%. Mid-Quarter Convention Quarter 4 Year 1: 5-year 5.00%; 7-year 3.57%

Washington Corporation began business in 2021 and has never sold a §1231 asset. In 2025, Washington sold the following business assets: Machinery (Amount Realized $36,000 Cost $31,000 A/D $9,000); Building (Amount Realized $68,000 Cost $90,000 A/D $20,000); Computer Equipment (Amount Realized $2,000 Cost $11,000 A/D $5,000). Washington owned each of the assets for several years. Assuming Washington’s marginal tax rate is 21%, what effect do the gains and looses have on Washington Corporation’s end of year tax liability?

Abraham Company purchased a total of $3,903,700 tangible personal property in 2025. How much of this cost can Abraham expense under §179?

Nixon Corporation has income from operations of $192,000, a dividend from a 5% owned corporation of $88,000, business expenses of $168,000 and a dividend received deduction of $44,000.  Nixon Corporation makes cash contributions of $35,000 to charitable organizations.  What is Nixon Corporation’s charitable contribution deduction for the current year?

Thomas acquired a 25% interest in Jefferson Partnership by contributing land having an adjusted basis of $16,000 and a fair market value of $50,000.  The land was subject to a $24,000 mortgage, which was assumed by Jefferson Partnership.  No other liabilities existed at the time of the contribution.  What was Thomas’ basis in Jefferson Partnership?

Reagan Corporation (a C corporation) was formed in 2022 and is a fiscal-year taxpayer with a June 30 year-end. Reagan wants to make an S election for its tax year beginning in 2025. The election must be made by

George owns a 10% interest in the Bush Partnership from January 1 through March 31 (the 91st day of the tax year) of 2025. On April 1, 2025 George buys an additional 10% interest in the partnership. On July 1, 2025 (the 182nd day of the year) George buys an additional 20% interest in the partnership. Bush Partnership’s ordinary income is $156,800 and it is earned evenly throughout the year. George’s distributive share of the ordinary income is