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Monique is planning to increase the size of the manufacturing business that she operates as a sole proprietorship

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Monique is planning to increase the size of the manufacturing business

that she operates as a sole proprietorship. She has a number of older assets that she plans to replace as part of the expansion. To finance this expansion she will have to sell some of her personal assets. Because it is close to the end of the tax year, she can time the sales of the assets to take the greatest advantage of the tax laws. Monique's ordinary income of $600,000 currently places her in the 37 percent marginal tax bracket.
Following are the assets that Monique plans to sell; assume that she will realize their fair market value on the sales.
Business assets
Acquisition date
Fair market value
Depreciation method
Adjusted basis
Original cost
Truck
2001
 $3,000
MACRS
$0
$20,000
Office building
1996
300,000
MACRS
160,000
285,000
Machine 1
2010
 10,000
MACRS
25,000
80,000
Machine 2
2011
 60,000
MACRS
55,000
95,000

Personal assets
Acquisition date
Fair market value
Original cost
Sculpture
1998
$400,000
$260,000
Painting
2005
 400,000
525,000
100,000 shares ACC
2012
 800,000
1,050,000
10,000 shares of BBL
2016
 400,000
350,000
In addition to the proceeds from the sales of the business assets, Monique needs a minimum of an additional $800,000 for her planned expansion. Which assets should Monique sell to minimize her tax liability on the sales of the business and personal assets?