FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
Leticia and Stephanie Sims purchased a home in Spokane, Washington, for $605,000. They moved into the home on February 1 of year 1. They lived in the home as their primary residence until June 30 of year 5, when they sold the home for $892,500.
Note: Leave no answer blank. Enter zero if applicable.
Required:
- What amount of gain on the sale of the home are the Sims required to include in taxable income?
- Assume the original facts, except that Leticia and Stephanie live in the home until January 1 of year 3, when they purchase a new home and rent out the original home. They finally sell the original home on June 30 of year 5 for $892,500. Ignoring any issues relating to
depreciation taken on the home while it is being rented, what amount of realized gain on the sale of the home are the Simses required to include in taxable income? - Assume the same facts as in part (b), except that the Sims live in the home until January of year 4, when they purchase a new home and rent out the first home. What amount of realized gain on the sale of the home will the Sims include in taxable income if they sell the first home on June 30 of year 5 for $892,500?
- Assume the original facts, except that Stephanie moves in with Leticia on March 1 of year 3 and the couple is married on March 1 of year 4. Under state law, the couple jointly owns Leticia's home beginning on the date they are married. On December 1 of year 3, Stephanie sells her home that she lived in before she moved in with Leticia. She excludes the entire $37,500 gain on the sale on her individual year 3 tax return. What amount of gain must the couple recognize on the sale in June of year 5?
\
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- Constanza, who is single, sells her current personal residence (adjusted basis of $244,500) for $684,600. She has owned and lived in the house for 30 years. Her selling expenses are $34,230. What is Constanza's realized and recognized gain?Constanza's realized gain is $fill in the blank 1 and her recognized gain would be $fill in the blank 2.arrow_forwardMoran owns a building he bought during year 0 for $198,000. He sold the building in year 6. During the time he held the building, he depreciated it by $50,000. What are the amount and character of the gain or loss Moran will recognize on the sale in each of the following alternative situations? Note: Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable. b. Moran received $213,000.arrow_forwardDexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers for $60,200 each. Dexter's basis in each lot sold is $42,140, and he incurs total selling expenses of $2,408 on each sale. What is the amount of Dexter's capital gain and ordinary income?arrow_forward
- Barbara sold land she purchased three months earlier for use in her business. Her cost and adjusted basis in the land prior to the sale were $80,000. She also incurred $10,000 in expenses related to the sale. The buyer paid $80,000 cash and assumed barbarous 20,000 mortgage on the property. What is the amount of Barbara's gain, and where on form 4797 will she report the sale?arrow_forwardDerek purchases a small business from Art on August 30, 2022. He paid the following amounts for the business: Fixed assets Goodwill Covenant not to compete Total $256,600 51,320 64,150 $372,070 a. How much of the $372,070 purchase price is for Section 197 intangible assets? b. What amount can Derek deduct on his 2022 tax return as Section 197 intangible amortization? If required, round the final answer to the nearest dollar. Use months, not days, in your computations.arrow_forwardMr. and Mrs. Scoler sold commercial real estate for $704,000. Their adjusted basis at date of sale was $570,400 ($624,000 cost- $53,600 straight-line accumulated depreciation). They will file their tax return as married filing jointly. Required: Compute the Scolers' income tax and Medicare contribution tax on their recognized gain assuming that this sale was their only property disposition this year and their marginal tax rate on ordinary income is 37 percent. Use Individual tax rate schedules and Tax rates for capital gains and qualified dividends. Note: Round your intermediate calculations and final answers to the nearest whole dollar amount. Answer is not complete. Amount Income tax on recognized gain $ 26,720 x Medicare contribution tax on recognized gain Total $ 26,720arrow_forward
- Dexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers for $159,400 each. Dexter's basis in each lot sold is $111,580, and he incurs total selling expenses of $6,376 on each sale. What is the amount of Dexter's capital gain and ordinary income? If required, round your answers to the nearest dollar. Dexter has a realized and recognized gain of $ as a capital gain. of which $ is classified as ordinary income andarrow_forwardYancy's personal residence is condemned as part of an urban renewal project. His adjusted basis for the residence is $572,600. He receives condemnation proceeds of $543,970 and invests the proceeds in stocks and bonds. If an amount is zero, enter "0". a. Calculate Yancy's realized and recognized gain or loss. Yancy's realized loss is $________________, and Yancy's recognized loss is $_________________. b. If the condemnation proceeds are $598,367, what are Yancy's realized and recognized gain or loss? Yancy's realized gain is $_______________, and Yancy's recognized gain is $_______________. c. Assume the house is rental property. Yancy's adjusted basis is $572,600 and he receives condemnation proceeds of $543,970 and invests the proceeds in stock. What are Yancy's realized and recognized gain or loss? Yancy's realized loss is $______________, and Yancy's recognized loss is $________________arrow_forwardMargaret and Johnny, a married couple, purchased their primary residence for $250,000 in June 2005. They sold their home for $240,000 on August 3, 2022. What is the loss amount they can deduct on their taxes?arrow_forward
- lly Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2022, she sells the following long-term assets used in her business: Asset Building Equipment Sales Price $ 235,000 85,000 Cost $ 205,000 153,000 Accumulated Depreciation $ 57,000 28,000 lly's taxable income before these transactions is $195,500. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. Note: Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amount. Description Taxable income Tax liability Amount $ 242,500arrow_forwardDexter owns a large tract of land and subdivides it for sale. Assume thatDexter meets all of the requirements of § 1237 and during the tax year sellsthe first eight lots to eight different buyers for $22,000 each. Dexter’s basis in eachlot sold is $15,000, and he incurs total selling expenses of $900 on each sale. Whatis the amount of Dexter’s capital gain and ordinary income? Formulate your answerby constructing a spreadsheet using a format similar to that found in Example 10.arrow_forwardLena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $42,000 with an adjusted basis of $25,200 for $27,720. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $12,600 for $8,190. What are the tax consequences of these tax transactions? Lena has an ordinary gain Lena has a § 1231 loss of $ ✔ of $ X from the sale of the first equipment. X from the sale of the second equipment.arrow_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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education