Parent Corporation Purchases a Machine (A Five-Year Property)for $20,000

question 26

Essay

Parent Corporation purchases a machine (a five-year property)for $20,000. It claims $4,000 of depreciation under the MACRS rules in the first year it owns the property. At the close of business on the last day of the first year, Parent sells the machine to a 100%-owned corporation (Subsidiary)for $18,000. Subsidiary immediately commences depreciating the machine as a five-year property using the regular MACRS rules.
What gain is reported by Parent Corporation in the first year that Subsidiary Corporation depreciates the machine?

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Definitions:

Protein

Essential nutrients composed of amino acids, serving as the building blocks for body tissues, enzymes, and hormones.

Dietary Reference Intakes

A set of reference values used to plan and assess nutrient intakes of healthy people, including RDAs, AIs, ULs, and EERs.

Adequate Intake

Adequate Intake refers to a recommended average daily nutrient intake level, based on estimations when there is not enough evidence to establish a precise RDA (Recommended Dietary Allowance).

RDA

The Recommended Dietary Allowance, which is the average daily dietary intake level sufficient to meet the nutrient requirements of nearly all (97%-98%) healthy individuals.