Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 17, Problem 2CPA
To determine
Calculate the amount of the gain during year 6 recaptured as ordinary under section 1250.
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Joe's Restaurant Inc. purchased an oven for $10,000 and takes $9,000 of depreciation on that oven over three years. Under IRC §1011 the basis of the oven is $1,000. A sells the oven for $20,000 thereby realizing a gain of $19,000. How much of the gain is recaptured as ordinary income, and how much is treated as §1231 gain . a. 9,000 recaptured as ordinary income 10,000 treated as §1231 gain b. 10,000 recaptured as ordinary income 9,000 treated as §1231 gain c. 19,000 recaptured as ordinary income none treated as §1231 gain d. none recaptured as ordinary income 19,000 treated as §1231 gain
Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $72.500.
and it has claimed $24,800 of depreciation expense against the building.
Required:
a. Assuming that Houswirth receives $59,700 in cash for the warehouse, compute the amount and character of Hauswirth's
recognized gain or loss on the sale.
b. Assuming that Hauswirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $59,700
compute Houswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land.
c. Assuming that Houswirth receives $26.500 in cash in year 0 and a $57,000 note receivable that is payable in year 1, compute the
amount and character of Hauswirth's gain or loss in year 0 and in year 1.
Complete this question by entering your answers in the tabs below.
Required a Required b Required c
Assuming that Hauswirth receives $59,700 in cash for the warehouse, compute the amount…
Chapter 17 Solutions
Individual Income Taxes
Ch. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - A depreciable business dump truck has been owned...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - Prob. 11DQCh. 17 - Prob. 12DQCh. 17 - Prob. 13DQCh. 17 - Prob. 14DQCh. 17 - Prob. 15DQCh. 17 - Prob. 16DQCh. 17 - Prob. 17DQCh. 17 - Prob. 18DQCh. 17 - Prob. 19DQCh. 17 - Prob. 20DQCh. 17 - Prob. 21CECh. 17 - Prob. 22CECh. 17 - LO.3 Renata Corporation purchased equipment in...Ch. 17 - LO.3 Jacob purchased business equipment for 56,000...Ch. 17 - Sissie owns two items of business equipment. Both...Ch. 17 - Prob. 26CECh. 17 - Prob. 27CECh. 17 - LO.4 Enzo is a single taxpayer with the following...Ch. 17 - Prob. 29CECh. 17 - Prob. 30CECh. 17 - LO.1, 2 Jenny purchased timber on a 100-acre tract...Ch. 17 - Prob. 32PCh. 17 - LO.2 A sculpture that Korliss Kane held for...Ch. 17 - Prob. 34PCh. 17 - Prob. 35PCh. 17 - Prob. 36PCh. 17 - Prob. 37PCh. 17 - Prob. 38PCh. 17 - Prob. 39PCh. 17 - Prob. 40PCh. 17 - Prob. 41PCh. 17 - Prob. 43PCh. 17 - Joanne is in the 24% tax bracket and owns...Ch. 17 - Prob. 45PCh. 17 - Prob. 46PCh. 17 - Prob. 47PCh. 17 - Prob. 48PCh. 17 - Prob. 49PCh. 17 - Jasmine owned rental real estate that she sold to...Ch. 17 - Prob. 51PCh. 17 - Prob. 52PCh. 17 - Prob. 53PCh. 17 - Prob. 54PCh. 17 - Jay sold three items of business equipment for a...Ch. 17 - Prob. 1RPCh. 17 - Prob. 2RPCh. 17 - Prob. 3RPCh. 17 - Prob. 4RPCh. 17 - Prob. 1CPACh. 17 - Prob. 2CPACh. 17 - Jerry uses a building for business purposes. The...Ch. 17 - Prob. 4CPACh. 17 - Prob. 5CPACh. 17 - Prob. 6CPACh. 17 - Wally, Inc., sold the following three personal...Ch. 17 - Net Section 1231 losses are: a. Deducted as a...Ch. 17 - Prob. 9CPACh. 17 - Prob. 10CPA
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- Kwan acquired a warehouse for business purposes on August 30, 2002. The building cost $550,000. Kwan took $291,500 of depreciation on the building, and then sold it for $680,000 on July 1, 2022. Required: What is the adjusted basis for the warehouse? What amount of the gain or loss is realized on the sale of the warehouse? What amount of the gain or loss is unrecaptured? At what rate is the unrecaptured gain or loss taxed? What amount of the gain or loss qualifies as a § 1231 gain or loss?arrow_forward11. Subject :- Accounting Sumner sold equipment that it uses in its business for $30,800. Sumner bought the equipment a few years ago for $79,600 and has claimed $39,800 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss? Multiple Choice $9,000 §1231 loss. $9,000 §1245 loss. $48,800 ordinary loss. $9,000 capital loss. None of the choices are correct.arrow_forwardIn 1980, Artima Corporation purchased an office building for $400,000 for use in its business. The building is sold during the current year for $550,000. Total depreciation allowed for the building was $390,000; straight-line would have been $360,000. As result of the sale, how much Sec. 1231 gain will Artima Corporation report? O A. $150,000 B. $510,000 C. $398,000 D. $540,000arrow_forward
- EB Corporation, a C corporation, purchases a warehouse on August 1, 2007, for $ 1 MILLION Straight-line depreciation is taken in the amount of $411, 750 before the property is sold on June 12, 2023, for $1.2 MIL. What is the amount and character of the gain recognized by EB on the sale of the realty?arrow_forwardIn year 0, Canon purchased a machine to use in its business for $56,000. In year 3, Canon sold the machine for $42,000. Between the date of the purchase and the date of the sale, Canon depreciated the machine by $32,000. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What are the amount and character of the gain or loss Canon will recognize on the sale, assuming that it is a partnership? Total Gain/Loss Recognized Character of Recognized Gain/Loss Ordinary Gain/Loss 1231 gain/Lossarrow_forwardYellow Corporation, a C corporation, purchases a building on July 1, 2008, for $1,000,000. Straight- line depreciation is taken in the amount of $425,000 before the property is sold on May 12, 2023, for $1,200,000. What is the amount and character of the gain recognized by Yellow on the sale of the realty? Ordinary income of $115,000 and § 1231 gain of $510,000. Ordinary income of $0 and § 1231 gain of $625,000. Ordinary income of $85,000 and § 1231 gain of $540,000. Ordinary income of $425,000 and § 1231 gain of $200,000.arrow_forward
- how much is treated as unrecaptured 1250 gain?arrow_forward4arrow_forward5. In year 0, Canon purchased a machine to use in its business for $56,000. In year 3, Canon sold the machine for $42,000. Between the date of the purchase and the date of the sale, Canon depreciated the machine by $32,000. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) d. What are the amount and character of the gain or loss Canon will recognize on the sale, assuming that it is a corporation and the sale proceeds were decreased to $20,000? Total Gain/Loss Recognized? Ordinary Gain/Loss? 1231 Gain/Loss?arrow_forward
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