JKL corporation (“JKL”) is in the nationwide trucking/transportation business and is moving some warehouse operations closer to a multistate hub location. JKL is an accural basis, calendar year-end taxpayer and concluded the following transactions:
1. In 2013, JKL exchanged a warehouse it has used in its business since 1990 for vacant land help for investment by one of its customers and marketable securities with a fair market value of $100,000. JKL bought the warehouse for $350,000. The customer bought the land in 2010 for $325,000.
In 2010, JKL replaced the roof on the warerhouse at a cost of $100,000. In late 2012, JKL installed three overhead surveillance cameras to monitor the loading dock areas of the truck bays in the warehouse. In 2012, JKL claimed the IRC 179 depreciation expense election on all three cameras. Ed Johnson,President and sole shareholder of JKL, estimated the cameras were worth $100 in 2013 and agreed to include them with the transer of the warehouse to his customer. JKL repaired, resurfaced the asphalt parking lot adjacent to the warehouse in 2010 ata cost of $86,000. JKL signed a lease torent the adjacent parking lot to its customer for a fair rental value of $1,000 a month, after the exchange (above) was completed.