Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 5AP
To determine
Apply the generic rules to calculate Firm Q’s realized gain, recognized gain and tax basis in the new asset for each of the following assumptions given.
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Firm M exchanged an old asset with a $16,600 tax basis and a $39,000 FMV for a new asset worth $27,500 and $11,500 cash.
Required:
a. If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset.
b. How would your answers change if the new asset were worth only $16,000, and Firm M received $23,000 cash in the exchange?
Complete this question by entering your answers in the tabs below.
Required A Required B
If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset.
Amount
Realized gain
Recognized gain
Tax basis
Firm M exchanged an old asset with a $11, 500 tax
basis and a $29, 000 FMV for a new asset worth $
22,500 and $6,500 cash. Required: If the exchange is
nontaxable, compute Firm M's realized and recognized
gain and tax basis in the new asset. How would your
answers change if the new asset were worth only $
11,000, and Firm M received $18,000 cash in the
exchange?
What would be the tax treatment of a superficial loss? a. Permanently denied. b. Immediately deductible. c. Deducted from the adjusted cost base (ACB) of the reacquired property. d. Added to the ACB of the reacquired property for the purposes of determining the future capital gain or loss when the property was sold.
Chapter 9 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 9 - Prob. 1QPDCh. 9 - Prob. 2QPDCh. 9 - Prob. 3QPDCh. 9 - Prob. 4QPDCh. 9 - Prob. 5QPDCh. 9 - Prob. 6QPDCh. 9 - Prob. 7QPDCh. 9 - Prob. 8QPDCh. 9 - Prob. 9QPDCh. 9 - Explain the difference between a substituted basis...
Ch. 9 - Prob. 11QPDCh. 9 - Prob. 12QPDCh. 9 - Prob. 13QPDCh. 9 - Prob. 14QPDCh. 9 - Prob. 15QPDCh. 9 - Prob. 1APCh. 9 - Prob. 2APCh. 9 - Prob. 3APCh. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Prob. 6APCh. 9 - This year, Neil Inc. exchanged a business asset...Ch. 9 - Prob. 8APCh. 9 - Prob. 9APCh. 9 - XYZ exchanged an old building for a new like-kind...Ch. 9 - Prob. 11APCh. 9 - Prob. 12APCh. 9 - Prob. 13APCh. 9 - Prob. 14APCh. 9 - Prob. 15APCh. 9 - Prob. 16APCh. 9 - Prob. 17APCh. 9 - Prob. 18APCh. 9 - Prob. 19APCh. 9 - On October 18 of last year, a flood washed away...Ch. 9 - Prob. 21APCh. 9 - Prob. 22APCh. 9 - Prob. 23APCh. 9 - Mr. ZJ owns a sole proprietorship. The business...Ch. 9 - Prob. 25APCh. 9 - Prob. 26APCh. 9 - Prob. 27APCh. 9 - Prob. 28APCh. 9 - Prob. 29APCh. 9 - Prob. 30APCh. 9 - Prob. 31APCh. 9 - Prob. 32APCh. 9 - Prob. 33APCh. 9 - Prob. 34APCh. 9 - Prob. 1IRPCh. 9 - Prob. 2IRPCh. 9 - Prob. 3IRPCh. 9 - Prob. 4IRPCh. 9 - Prob. 5IRPCh. 9 - Prob. 6IRPCh. 9 - Prob. 7IRPCh. 9 - Prob. 8IRPCh. 9 - Prob. 9IRPCh. 9 - Prob. 10IRPCh. 9 - Prob. 1RPCh. 9 - Prob. 2RPCh. 9 - Prob. 3RPCh. 9 - Prob. 1TPCCh. 9 - Prob. 2TPCCh. 9 - Prob. 3TPCCh. 9 - Croyden is a calendar year, accrual basis...
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- Which of the following statements regarding capital asset holding periods is false? Group of answer choices A. Trade dates, rather than settlements dates, are used to determine the date of acquisition and sale. B.The holding period for property received as a gift usually includes the holding period of the donee. C.The holding period for property acquired from a decedent is long term even if the property is sold less than one year after it was acquired. D. A holding period of exactly one year or more is long term.arrow_forwardTo calculate the amount realized on the sale of an asset, which of the following are part of the calculation? a) Cash received by the seller b) All of the above c) Adjusted basis of the asset sold d) Fair market value of the property received by the seller e) A & C onlyarrow_forwardA Ltd owns an owner-occupied asset that is measured using the revaluation model. The asset’scarrying amount at the end of the financial year is R20 000. The fair value of the asset is R27 000.The entity has determined the fair value less costs to sell of the asset as R26 000 and the value inuse as R32 000.Required:Explain how you would calculate the carrying value of the asset and at what value the asset shouldbe presented at in the financial statements.arrow_forward
- OCD exchanged old realty for new like-kind realty. OCD’s adjusted basis in the old realty was $31,700 ($60,000 initial cost − $28,300 accumulated depreciation), and its FMV was $48,000. Because the new realty was worth only $45,000, OCD received $3,000 cash in addition to the new realty. Required: a-1. Compute OCD's realized gain. a-2. Determine the amount and character of any recognized gain. b. Compute OCD’s basis in its new realty.arrow_forwardAll of the following statements are true, except: When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values. Donation of PPE should be recorded at the fair value of the donated asset Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evidentarrow_forwardto be settled on Day 4. If the entity uses the trade date n entity commits to sell a financial asset on Day 1. The sale is accounting, which of the following statements is correct? The fair value change between Days 1 and 4 is recognized. a An 1. ses a. The asset is derecognized, and the gain or loss on the sale is recognized, on Day 4. The asset is derecognized, and the gain or loss on the sale is recognized, on Day 1. i The asset is derecognized only when the sale price is lly he collected.arrow_forward
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