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ACC - Jules and Julie Noel




Question;1-5 deal with property bought, used and disposed of by Jules and Julie Noel. The Noels are married, have no children and jointly own and operate a toyshop. Their principal home is in North Pole, Alaska.For each of the following properties compute the initial basis (if more than one is possible, give all alternatives), cost recovery period and type (depreciation, amortization, or depletion), cost recovery allowed 2014, adjusted basis December 31st, 2014 (you may have to determine prior year depreciation to getthis amount)1. On December 1, 2012, they bought a new sleigh (5-year property) to use for delivering toys. They paid $5,000 down and borrowed $10,000 to pay for the sleigh.2. Their toyshop was purchased on March 28, 2006. They paid $10,000 cash and borrowed $80,000 at 9% interest for 30 years. For tax purposes, the land is assessed at $10,800 and the building at $79,200.3. Jules and Julie own a condominium in Florida, which they have used in the past for long summer vacations. They bought the condo in 2002 for $55,000.In 2013 they decided to convert it to rental property. The condo was appraised May 2, 2013 (the date of conversion) for $75,000. 4. Jules and Julie own the following stocks:Reindeer Foods, Inc. - 450 shares, purchased June 1, 2002, for $50 per share. They paid $2 per share commission to acquire the stock.Humbug Corporation - Julies Uncle Scrooge gave them 1,000 shares of stock for a Christmas present in 2013. His basis at the time of the gift, $5,000, was the same as the FMV, and he did not owe gift tax. He had purchased the stock on December 1, 2005.5. Jules father died on June 1, 2014 and left them 1,000 shares of Greenpine Corporation stock. The father had paid $5 per share for the stock in 2002, and it was worth $8 per share on the day he died. The executor did not elect to use the alternate valuation date.


Paper#38908 | Written in 18-Jul-2015

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