Western Bank & Trust purchased land and a building for the lump sum of $3,000,000. To get the...

Question

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

1. Explain the tax advantage of allocating too much to the building and too little to the land.

2. 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. Reply to at least two of your classmates. In-text citations and references may be in APA format but is NOT required.

Robert · Accepted Answer

1 
 
1. Land and building was purchased by Western Bank & Trust for lump amount of 
$3,000,000 and 90% allocation to the building ($2,700,000) and rest 10% allocation to 
the land $300,000 (10%) instead of making more realistic allocation among building and 
land as 70% and 30% respectively of the total value.

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...

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