Question;74. LO.8, 9 Copper Industries (a sole proprietorship) sold three ? 1231 assets during 2013.Data on these property dispositions are as follows:Asset Cost Acquired Depreciation Sold for Sold onRack $110,000 10/10/10 $70,000 $55,000 10/10/13Forklift 45,000 10/16/09 21,000 15,000 10/10/13Bin 97,000 03/12/12 31,000 60,000 10/10/13a. Determine the amount and the character of the recognized gain or loss from the disposition of each asset.b. Assuming that Copper has $6,000 nonrecaptured net ? 1231 losses from prior years, how much of the 2013 recognized gains is treated as capital gains?75. LO.8, 9 On December 1, 2011, Lavender Manufacturing Company (a corporation) purchased another company?s assets, including a patent. The patent was used in Lavender?s manufacturing operations, $49,500 was allocated to the patent, and it was amortized at the rate of $275 per month. On July 30, 2013, Lavender sold the patent for $95,000. Twenty months of amortization had been taken on the patent. What are the amount and nature of the gain Lavender recognizes on the disposition of the patent?Write a letter to Lavender discussing the treatment of the gain. Lavender?s address is6734 Grover Street, Boothbay Harbor, ME 04538. The letter should be addressed to BillCubit, Controller.76. LO.8, 10 On June 1, 2009, Skylark Enterprises (not a corporation) acquired a retail store building for $500,000 (with $100,000 being allocated to the land). The store building was 39-year real property, and the straight-line cost recovery method was used. The property was sold on June 21, 2013, for $385,000.a. Compute the cost recovery and adjusted basis for the building using Table 8.6 fromChapter 8.b. What are the amount and nature of Skylark?s gain or loss from disposition of the building? What amount, if any, of the gain is unrecaptured ? 1250 gain?77. LO.8, 9, 10 On May 2, 1986, Hannah acquired residential real estate for $450,000. Of the cost, $100,000 was allocated to the land and $350,000 to the building. On January 20, 2013, the building, which then had an adjusted basis of $0, was sold for $545,000 and the land for $200,000.a. Determine the amount and character of the recognized gain from the sale of the building.b. Determine the amount and character of the recognized gain from the sale of the land.78. LO.8, 9, 10 Larry is the sole proprietor of a trampoline shop. During 2013, the following transactions occurred:? Unimproved land adjacent to the store was condemned by the city on February 1.The condemnation proceeds were $15,000. The land, acquired in 1984, had an allocable basis of $40,000. Larry has additional parking across the street and plans to use the condemnation proceeds to build his inventory.? A truck used to deliver trampolines was sold on January 2 for $3,500. The truck was purchased on January 2, 2009, for $6,000.On the date of sale, the adjusted basis was zero.? Larry sold an antique rowing machine at an auction. Net proceeds were $4,900. The rowing machine was purchased as used equipment 17 years ago for $5,200 and is fully depreciated.? Larry sold an apartment building for $300,000 on September 1. The rental property was purchased on September 1, 2010, for $150,000 and was being depreciated over a27.5-year life using the straight-line method. At the date of sale, the adjusted basis was $124,783.? Larry?s personal yacht was stolen on September 5. The yacht had been purchased inAugust at a cost of $25,000. The fair market value immediately preceding the theft was $19,600. Larry was insured for 50% of the original cost, and he received $12,500 on December 1.? Larry sold a Buick on May 1 for $9,600. The vehicle had been used exclusively for personal purposes. It was purchased on September 1, 2009, for $20,800.? Larry?s trampoline stretching machine (owned two years) was stolen on May 5, but the business?s insurance company will not pay any of the machine?s value becauseLarry failed to pay the insurance premium. The machine had a fair market value of $8,000 and an adjusted basis of $6,000 at the time of theft.? Larry had AGI of $102,000 from sources other than those described above.? Larry has no nonrecaptured ? 1231 lookback losses.a. For each transaction, what are the amount and nature of recognized gain or loss?b. What is Larry?s 2013 AGI?79. LO.8, 10 On January 1, 2004, Stephanie Bridges acquired depreciable real property for $50,000. She used straight-line depreciation to compute the asset?s cost recovery.The asset was sold for $96,000 on January 3, 2013, when its adjusted basis was $38,000.a. What are the amount and nature of the gain if the real property is residential?b. Stephanie is curious about how the recapture rules differ for residential rental real estate acquired in 1986 and for residential rental real estate acquired in 1987 and thereafter. Write a letter to Stephanie explaining the differences. Her address is 2345Westridge Street #23, Edna, KS 67342.80. LO.8, 9, 11, 14 Joanne is in the 28% tax bracket and owns depreciable business equipment that she purchased several years ago for $135,000. She has taken $100,000 of depreciation on the equipment, and it is worth $55,000. Joanne?s niece, Susan, is starting a new business and is short of cash. Susan has asked Joanne to gift the equipment to her so that Susan can use it in her business. Joanne no longer needs the equipment. Identify the alternatives available to Joanne if she wants to help Susan and the tax effects of those alternatives. (Assume that all alternatives involve the business equipment in one way or another, and ignore the gift tax.)81. LO.8, 9, 11 Anna received tangible personal property with a fair market value of $65,000 as a gift in 2011. The donor had purchased the property for $77,000 and had taken $77,000 of depreciation. Anna used the property in her business. Anna sells the property for $23,000 in 2013. What are the tax status of the property and the nature of the recognized gain when she sells the property?82. LO.8, 9, 11 Miguel receives tangible personal property as an inheritance in 2011. The property was depreciated by the deceased (Miguel?s father), and Miguel will also depreciate it. At the date of the deceased?s death, the property was worth $532,000. The deceased had purchased it for $900,000 and taken $523,000 of depreciation on the property. Miguel takes $223,000 of depreciation on the property before selling it for $482,000 in 2013. What are the tax status of the property and the nature of the recognized gain when Miguel sells the property?83. LO.11 David contributes to charity some tangible personal property that he had used in his business and depreciated. At the date of the donation, the property has a fair market value of $233,000 and an adjusted basis of zero, it was originally acquired for $400,000. What is the amount of David?s charitable contribution?84. LO.8, 9, 11 Dedriea contributes to her wholly owned corporation some tangible personal property that she had used in her sole proprietorship business and depreciated.She had acquired the property for $566,000 and had taken $431,000 of depreciation on it before contributing it to the corporation. At the date of the contribution, the property had a fair market value of $289,000. The corporation took $100,000 of depreciation on the property and then sold it for $88,000 in 2013. What are the tax status of the property to the corporation and the nature of the recognized gain or loss when the corporation sells the property?85. LO.8, 9, 12 Tan Corporation purchased depreciable tangible personal property for $100,000 in 2011 and immediately expensed the entire cost under ? 168(k). In 2013, when the property was worth $80,000, Tan distributed it as a dividend to the corporation?s sole shareholder. What was the tax status of this property for Tan? What is the nature of the recognized gain or loss from the distribution of the property?86. LO.7, 8, 10 Jasmine owned rental real estate that she sold to her tenant in an installment sale. Jasmine had acquired the property in 2001 for $400,000, had taken $178,000 of depreciation on it, and sold it for $210,000, receiving $25,000 immediately and the balance (plus interest at a market rate) in equal payments of $18,500 for 10 years. What is the nature of the recognized gain or loss from this transaction?87. LO.9 Jay sold three items of business equipment for a total of $300,000. None of the equipment was appraised to determine its value. Jay?s cost and adjusted basis for the assets are shown below.Asset Cost Adjusted BasisSkidder $230,000 $ 40,000Driller 120,000 60,000Platform 620,000 ?0?Total $970,000 $100,000Jay has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $300,000 to the buyer in this arm?s length transaction. How should Jay allocate the sales price and figure the gain or loss on the sale of the three assets?
Paper#39627 | Written in 18-Jul-2015Price : $25