Problem
Austin receives tangible personal property as an inheritance in 20x3. The property was depreciated by the deceased (Austin's father), and Austin will also depreciate it. At the date of the deceased's death, the property was worth $532,000. The deceased had purchased it for $900,000 and had taken $523,000 of depreciation on the property. Austin takes $223,000 of depreciation on the property before selling it for $482,000 in 20x5.
i. What are the tax status of the property and the nature of the recognized gain when Austin sells the property?
ii. Assume instead that Austin's father gifted the property to Austin before his death. What are the tax status of the property and the nature of the recognized gain when Austin sells the property?