Cooper Construction Company sells a used crane to Alpha Construction for $94,000. The crane, which originally cost $880,000, is fully depreciated. Under Sec. 1245 depreciation recapture rules, the entire gain is taxable as ordinary income. Cooper receives a down payment of $49,000 and is to receive $15,000 per year for three additional years plus interest of 10%, which is greater than the applicable federal rate. Read the requirements. Requirement a. Compute the gain from the sale. The gain from the sale is Requirement b. How much gain is taxable in the year of the sale? The taxable amount of the gain in the year of the sale is Requirement c. What income does Cooper report in each of the next three years? The income that Cooper Construction Company needs to report in each of the next three years is
Cooper Construction Company sells a used crane to Alpha Construction for $94,000. The crane, which originally cost $880,000, is fully depreciated. Under Sec. 1245 depreciation recapture rules, the entire gain is taxable as ordinary income. Cooper receives a down payment of $49,000 and is to receive $15,000 per year for three additional years plus interest of 10%, which is greater than the applicable federal rate. Read the requirements. Requirement a. Compute the gain from the sale. The gain from the sale is Requirement b. How much gain is taxable in the year of the sale? The taxable amount of the gain in the year of the sale is Requirement c. What income does Cooper report in each of the next three years? The income that Cooper Construction Company needs to report in each of the next three years is
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 44P
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Transcribed Image Text:Cooper Construction Company sells a used crane to Alpha Construction for $94,000. The crane, which originally cost $880,000, is fully depreciated. Under
Sec. 1245 depreciation recapture rules, the entire gain is taxable as ordinary income. Cooper receives a down payment of $49,000 and is to receive $15,000
per year for three additional years plus interest of 10%, which is greater than the applicable federal rate.
Read the requirements.
Requirement a. Compute the gain from the sale.
The gain from the sale is
Requirement b. How much gain is taxable in the year of the sale?
The taxable amount of the gain in the year of the sale is
Requirement c. What income does Cooper report in each of the next three years?
The income that Cooper Construction Company needs to report in each of the next three years is
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ISBN:
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Author:
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Publisher:
CENGAGE LEARNING - CONSIGNMENT