![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
During the current year, Jean and Steve sold the following assets and made the following gains and
losses.
Capital asset. Capital gain/loss. Type
A stock. $35,000. long 0/15/20%
B stock. (8,000). short
Antiques. 5,000. long 28%
Rental home. 100,000. long 25% and 0/15/20%
*40,000 of the gain is 25 percent gain from accumulated depreciation on the property.
i)Complete the capital gains and losses netting process and determine the maximum tax rates
applicable to the gains.
ii) Given that Jean and Steve have taxable income of $450,000 before considering the sales above,
what is their gross tax liability for 2021 assuming they file a joint return?
Expert Solution
![Check Mark](/static/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 4 steps with 4 images
![Blurred answer](/static/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Eleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Required:b. What is the character of this gain?c. How would your answers change if Lynn was a noncorporate business?arrow_forwardAn Individual nold the following annnts thin year. Sala price Cost Solling cont Painting $2,000 $ 300 $100 Antique clock 12,000 250 20 Antique chair 750 500 15 Gold Coin. 600 1,000 10 Mr. Individual has an unclaimed capital loss on listed personal property of $500 arising three years ago. All these assets were purchased within the last 10 years. Required: Please calculate the net taxable capital gains for Mr. Individual.arrow_forwardGwen sold some equipment for $10,250 in cash, $1,000 of marketable securities, the buyer assumption of her $1,500 loan and incurred selling expenses of $500. She had purchased the equipment several years ago for $22,000. On November 10th of the current year, the computer was worth $11,50O. If $11,500 of depreciation deductions had been taken, answer the following questions. a. What is the Gwen's amount realized in the transaction? b. What is Gwen's adjusted basis in the equipment? c. What is Gwen's recognized gain or loss? d. How is Gwen's gain taxed?arrow_forward
- Eleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Requiredc. How would your answers change if Lynn was a noncorporate business?arrow_forwardAmelia’s business goes bankrupt this year. To close her business, Amelia starts by selling off her business assets. Below are the asset disposition transactions: Assets Purchased Date Cost Sold date Sold price Delivery car 5/1/23 30k 12/31/23 25k Furniture 3/20/20 40k 12/31/23 20k Equipment 4/1/20 110k 12/31/23 100k Land 1/1/22 150k 12/31/23 180k Assume there is no Section 179 and bonus depreciation. Use MACRS only for depreciation. Show detailed calculation and explanation a) Calculate total accumulated depreciation of each asset until the sold date (12/31/23). b) Calculate the adjusted basis for each asset c) Calculate the gain/loss for each asset d) Point out the exact character of gain/loss for each asset gain/loss (ex: Ordinary, pure 1231, 1245, 1250, etc.) e) Calculate the Net 1231 Gain/Loss Hint: Be aware of 1245 Depreciation recapture and 1231 lookback rules Hint: Review textbook chapter on this. In the year of disposition, under half-year convention, only ½ of MACRS…arrow_forwardCayden Purchased the following for his rental real estate business: An apartment building; he paid $103,500 for the building ( not including the value of the land). Furniture for $8,649. Pickup truck for $27,500, used for 75% business. What is Cayden's total unadjusted basis immediately after acquisition (UBIA) of these assets? 1) $29,274 2) $112,149 3) $132,774 4) $139,649arrow_forward
- Mike sold the following assets during the current year: Painting Stamp collection Car Antique desk O a $654 O b. $788 Sales price O c. $1,310 O d. $655 2,508 600 708 1,181 Cost 885 1,200 1,406 Which one of the following amounts represents his taxable capital gain, net of allowable capital losses, for tax purposes during the current year? 1,379arrow_forwardJonathan has the following separate casualties during the year: Decrease in FairMarket Value AdjustedBasis InsuranceReimbursement HoldingPeriod Business furniture $4,000 $5,000 $ 0 3 years Business machinery 15,000 14,000 10,000 3 years The furniture was completely destroyed while the machinery was partially destroyed. Jonathan also sold business land for a Section 1231 gain of $10,000. Calculate the amount and nature of Jonathan's gains and losses as a result of these casualties. Amount of Gain or Loss Gain or Loss Business furniture $fill in the blank 1 Business machinery $fill in the blank 3 Since both result in a casualty , the losses are from Section 1231 treatment and are treated as losses.arrow_forwardLizette inherited the following items from her grandmother: Unrealized Gain/(Loss) Painting $25,000 Stocks $20,000 Vehicle ($15,000) How much gain/(loss) is Lizette required to report in income? OA) $45,000 gain Adjusted Basis Fair Market Value $75,000 $50,000 $25,000 $50,000 $30,000 $40,000 B) $150,000 gain C) $0 gain D) $30,000 gainarrow_forward
- Landesharrow_forwardJason sold various business-use assets in Year 10 resulting in a net Section 1231 gain of $8,100. Jason had the following net Section 1231 gains and losses in the previous years: Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 ($4,000) ($2,900) $5,100 Year 10 $1,100 ($5,400) $4,400 How is the Year 10 net Section 1231 gain of $8,100 treated? (Do not leave any field blank. If answer is zero, please enter O for the amount.) $ Ordinary Loss $ Ordinary Income $ LTCG Gainarrow_forwardEvergreen Co. has a land which he has purchased at the cost of $85,000. Currently the value of the land has been appreciated by $30,000. Should evergreen recognize any loss or gain in the income statement? Give your explanationsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education