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
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 6AP
a.
To determine
Calculate the firms’ realized and recognized gain and tax basis in the new asset.
b.
To determine
Explain the manner in which the answer will change if the new asset is worth of only $7,000 and Firm M received $14,000 cash in the exchange.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
The Tuvok Company exchanged an old asset with a $125,700 tax basis
and a $155,000 FMV for a new asset with a $147,250 FMV. Assume that
this transaction is a like-kind exchange.
Write all numbers with a comma, but no dollar sign (example: 130,000).
a. For the exchange to occur (and be nontaxable), how much boot (if any)
does Tuvok needs to receive?
b. Calculate the gain realized:
Calculate the gain recognized:
c. Calculate the basis of the new asset for Tuvok:
d. Assume the transaction is not a like-kind exchange and is a taxable
transaction.
Calculate the gain realized:
Calculate the gain recognized:
Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipmentwere $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively.Calaveras also paid $8,000 in cash. At what amount will Calaveras value the pickup trucks? How much gain orloss will the company recognize on the exchange? Assume the exchange has commercial substance.
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...
Knowledge Booster
Similar questions
- Abbott exchanges land in a transaction that lacks commercial substance. The net book value of the land exchanged is $50,000. In exchange Abbott receives land with a fair value of $60,000 and $20,000 in cash. What is the gain that Abbott should recognize?arrow_forwardCalaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. To equalize fair values, Calaveras paid $8,000 in cash. At what amount will Calaveras value the pickup trucks? How much gain or loss will the company recognize on the exchange? Assume the exchange has commercial substance.arrow_forwardCase A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000(original cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid$20,000 cash to complete the exchange. The exchange has commercial substance.Required:1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value ofthe new tractor?2. Repeat requirement 1 assuming that the fair value of the old tractor is $14,000 instead of $9,000.arrow_forward
- Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000 (original cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid $20,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? 2. Repeat requirement 1 assuming that the fair value of the old tractor is $14,000 instead of $9,000.arrow_forwardC Inc. and D Co. have an exchange with no commercial substance. The asset given up by C Inc. has a book value of P12,000. The asset given up by D Co. has a book value of P20,000. Cash of P4,000 is received by D Co. What amount should C Inc. record for the asset received?arrow_forwardLove Inc. and Life Co. have an exchange with no commercial substance. The asset given up by Love Inc. has a book value of P12,000. The asset given up by Life Co. has a book value of P20,000. Cash of P4,000 is received by Life Co. What amount should Love Inc. record for the asset received?arrow_forward
- Company A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. How much gain or loss should be recorded by Company B?arrow_forwardCompany A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. How much gain or loss should be recorded by Company A? a. P60,000 gain b. P30,000 loss c. P120,000 loss d. P120,000 gainarrow_forwardCompany A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. How much gain or loss should be recorded by Company A? P120,000 gain P120,000 loss P30,000 loss P60,000 gainarrow_forward
- Grabrille Inc. and Lucy Company have an exchange with no commercial substance. The asset given up by Gabrille has a book value of P120,000 and a fair value of P135,000. The asset given up by Lucy has a book value of P220,000 and a fair value of P200,000. Cash of P65,000 is received by Lucy. What amount should Gabrille record for the asset received? a. 200,000 b. 110,000 c. 185,000 d. 135,000arrow_forwardYou acquire a grinder priced al $65,000 by trading in a similar grinder andpaying cash for the remaining balance. Assuming that the trade-in allowanceis $11,000 and the book value of the asset traded in is $12,000, what is the cost basis of the new grinder for the computation of depreciation for tax purposes?arrow_forwardBonnie Inc. and Clyde Company have an exchange with no commercial substance. The asset given up by Bonnie has a book value of $120,000 and a fair value of $135,000. The asset given up by Clyde has a book value of $220,000 and a fair value of $200,000. Boot (cash) of $65,000 is received by Clyde. What amount should Bonnie record for the asset received?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
