1. The machine needed extensive repairs and was not worth repairing. Diaz disposed of the machine, receiving nothing in return. 2. Diaz sold the machine for $17,000 cash. 3. Dlaz sold the machine for $31,900 cash. 4. Diaz sold the machine for $41,100 cash.

Timmy paid $800,000 cash for all of the assets of Bob’s Chicken Fried Steak Shack, Inc. (Bob’s). Timmy did not buy the stock of Bob’s; rather he bought all of Bob’s assets from Bob’s.   Here is a list of the physical assets that Timmy got for his $800,000, showing the stand-alone FMV of each category:***   Land & Building, $350,000 Furniture & Equipment, $160,000 Inventory, $15,000   Bob’s latest property tax appraisal from Dallas County showed the land value at $150,000, the building at $100,000, the furniture and equipment at $75,000.   What is Timmy’s depreciable basis in the building? What is Timmy’s depreciable basis in the furniture and equipment? What amount will Timmy eventually record as COGS with respect to the purchased inventory? How much, if any, goodwill did Timmy purchase?   Address each item separately. (Each part must be correctly answered to earn a point for this item (3).)   *** These FMVs are as agreed and stated in the negotiated Purchase Agreement.

Linda purchased two cars in 2018.  A vintage Thunderbird for $72,000 and a Honda Accord for $29,000.  Both cars were used solely for personal purposes.  During the current year, she sold the Thunderbird for $85,000 and the Honda for $25,000.  How much gain or loss will she report for these two transactions? A. $9,000 gain B. $4,000 loss C. No gain or loss D. $13,000 gain

Melody (single) had her home by the state condemned department of transportation. Her basis in the house was $200,000. She received a net condemnation award of $500,000. Rather than replace the property, Melody decided to rent an apartment. Melody had owned the home and used it as her main home for the ten years prior to the condemnation. How much gain does Melody report from the sale? a. $0 b.$50,000 c.$250,000 d.$300,000

Last year, Thea and Rory Brown bought a home with a dwelling replacement value of $350,000 and insured it (via an HO-5 policy) for $310,000. The policy reimburses actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a two-year-old television set with a current replacement value of $600 and an estimated useful life of eight years. They also took jewelry valued at $1,850 and silver flatware valued at $3,000. Make sure to account for depreciation. If the Browns’ policy has an 80 percent co-insurance clause, do they have enough insurance? Assuming a 50 percent coverage C limit, calculate how much the Brown family would receive if they filed a claim for the stolen items. What advice would you give the Brown family about their homeowner’s coverage?

Igor owns a rental house and had to paint the living room, kitchen and bathroom after the most recent tenant moved out.  The rooms had not been painted in the last five years and he worried he would not be able to rent it out to another tenant at the current fair market value if he didn’t repaint.  The cost to repaint the three rooms was $1,500 ($1,000 labor and $500 paint).               What amount, if any, can Igor deduct of this expense and on what form should it be listed?

Chuck sold a tractor to a dealer for $16,000. He bought the tractor for $25,500 several years ago and has claimed $12,000 of depreciation deduction on the tractor. What is the amount and character of his gain or loss from the sale of the tractor?

None

Q1: Hansen bought his primary residence on 1/1/2010 for $400,000. He put $50,000 of his own money as the down payment, and borrowed $350,000 from a bank for the remainder of the purchase price. On 1/1/2021, he was laid off from his job, and he could not make his mortgage payments. On 3/30/2021, the bank foreclosed on the house, and took the house back from Hansen. On 3/30/2021, the house was worth $150,000, and he owed $300,000 to the bank. The bank sold the house for $150,000 which the bank used to pay off half of the $300,000 that Hansen owed. The bank forgave the remaining $150,000 that Hansen owed the bank, pursuant to the foreclosure. In 2021, how much taxable income does Hansen recognize from the bank forgiving the home loan to Hansen? a. $0 b.$150,000 c. $300,000 d. $400,000   Q2. Diamelle purchased a life insurance policy on her life, and named Eric, her husband, as the beneficiary. Diamelle paid $50,000 for the life insurance policy. Upon Diamelle’s death, the life insurance…

Last year, Jose and Josefina Munoz bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-5 policy) for $225,000. The policy reimburses actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a new computer with a current replacement value of $1,500 and an estimated useful life of three years. They also took jewelry valued at $2,500 and a coin collection valued at $1,500. If the Munozs’ policy has a 90 percent co-insurance clause, do they have enough insurance? Assuming a 50 percent coverage C limit, calculate how much the Munoz family would receive if they filed a claim for the stolen items. What advice would you give the Munoz family about their homeowner’s coverage?