Pinnacle Bank & Trust purchased land and building for a lump sum of $2,000,000. The get the maximum tax deduction, Pinnacle allocated 85% of the purchase price to the building and 15% to the land. A more realistic allocation would have been 70% to the building and 30% to the land.
Explain the tax advantage of allocating too much to the building and too little to the land.
Was Pinnacle's allocation ethical? If so, why. If not, why not? Identify who was harmed.