Concept explainers
a
Introduction:Section 1231 assets are those assets that are held by a business for more than one year.The gain on the sale of these assets is taxed at the lower
The adjusted basis of the property.
b
Introduction:Section 1231 assets are those assets that are held by a business for more than one year.The gain on the sale of these assets is taxed at the lower
The recomputed basis of the property.
c
Introduction: Section 1231 assets are those assets that are held by a business for more than one year.The gain on the sale of these assets is taxed at the lower capital gain tax rate and the rate of ordinary income tax.If the sold property is held for less than one year, then 1231 gain cannot be applied. Section 1250 is applicable to gain on sale of real property.Under section 1250, any gain related to previously deducted depreciation is attributed to uncaptured depreciation.
The amount of ordinary income under section 1245.
d
Introduction:Section 1231 assets are those assets that are held by a business for more than one year.The gain on the sale of these assets is taxed at the lower capital gain tax rate and the rate of ordinary income tax.If the sold property is held for less than one year, then 1231 gain cannot be applied. Section 1250 is applicable to gain on sale of real property.Under section 1250, any gain related to previously deducted depreciation is attributed to uncaptured depreciation.
The Section 1231 gain.
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Chapter 8 Solutions
Income Tax Fundamentals 2020
- Alice purchases a rental house on August 22,2019, for a cost of $174,000. Of this amount, $100,000 is considered to be allocable to the cost of the home, with the remaining $74,000 allocable to the cost of the land. What is Alice's maximum depreciation deduction for 2019 using MACRS? $2,373 $1,970 $1,364 $1,061 $1,009arrow_forwardIn March 2019, Helen Carlon acquired used equipment for her business at a cost of 300,000. The equipment is five-year property for regular tax depreciation purposes. a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2019 for regular income tax purposes, what is the amount of the AMT adjustment? b. Draft a letter to Helen regarding the choice of depreciation methods. Helens address is 500 Monticello Avenue, Glendale, AZ 85306.arrow_forwardIn 2019, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1,2017, at a cost of $22,000. Mary has deducted depreciation on the machine of $6,000. What is the amount and nature of Mary's gain as a result of the sale of the machine? $2,000 Section 1231 gain $8,000 ordinary income under Section 1245 $6,000 ordinary income and $2,000 Section 1231 gain $6,000 Section 1231 gain and $2,000 ordinary income under Section 1245 None of the abovearrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT