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What is the amount of gain recognized on the home sale in 2014

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1. Mary owns a drapery business and in 2014 sold three sewing machines for $6000. She purchased the machine for $5000 in 2012 and claimed depreciation of $3000. What are the amount and the correct nature of Mary's gain?;a. 0 ordinary gain and $4000 section 1231 gain;b. 2000 ordinary gain and 2000 section 1231 gain;c. 3000 ordinary gain and 1000 section 1231 gain;d. 4000 ordinary gain and 0 section 1231 gain;2. Section 1245 recapture applies to all the following except;a. depreciable personal property;b. assets sold or exchanged at a loss;c. total depreciation or amortization allowed or allowable;d. amortizable intangible personal property.;3. If an individual is liable for self-employment tax, a portion of the self-employment tax is;a. a for AGI deduction;b. from AGI as an itemized deduction;c. a Schedule C business expense;d. self-employment tax is nondeductible;Problem;1. George and Meredith, who are married, have a regular tax liability of $21,800, taxable income of $100,000, tax preferences of $23,000, and positive adjustments attributable to limitations on itemized deductions of $18700 this year. They claim $11,700 of personal exemptions for themselves and their 20 year old dependent daughter. The AMT exemption is $153900 (use the $153,900 as the correct amount of the exemption). What is George and Meredith's alternative minimum tax for 2014?;2. James and Ellen Connors, who are both 50 years old and married, sell their personal residence on July 25, 2013 for $950,000. They have lived in the house for 20 years. The basis of their home is $350,000. They purchased a new home for $1,000,000 in August 2014. After living in that home for 125 days, the Connors were forced to sell their new home in 2014 for $1,300,000 and move to another climate due to Ellen's severe health problems. What is the amount of gain recognized on the home sale in 2014?

 

Paper#23976 | Written in 18-Jul-2015

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