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Property+Transactions+Tax+Return+2014-Dean Price is self-employed and owns a manufacturing business.




Question;Dean Price is self-employed and owns a manufacturing business.He bought a manufacturing equipment (7-year personal property) on 4/1/2011 for $50,000. Use half-yearconvention to calculate the MACRS depreciation deduction on the equipment for 2011 and 2012He also has a pick-up truck used for business (5-year recovery period) acquired on 10/1/2011 for$25,000. On 11/15/2012, he sold the pick-up truck for $24,000. Use the half-year convention to calculatethe MACRS depreciation on the truck for 2011 and 2012.On 10/26/2012 Dean sold his old storage building used for his business for $220,000. He purchased thebuilding in 2001 for $100,000. Total depreciation taken on the building is $20,000.His 2012 Business income and expenditures (Schedule -C):Sales$655,000Cost of goods sold$ 315,000Other business expenses (incl. 2012 deprecation taken on the storage building) $ 140,000In 2012 Dean also sold various assets. The information about the selling price and tax basis of theproperty is listed below.AssetSoldInitialBasis2012DepreciationAmountAccumulatedDepreciation4/4/1110/16/12$3,000$375$825$2,9003/1/1011/8/12$8,000$1,000$2,200$4,000Marketablesecurities2/1/1212/1/12$12,000$0$0$20,000Land held forinvestment7/1/1111/29/12$45,000Black leather sofa(used in office)Office chairsPlaced inService (orpurchased)$0SellingPrice$0In 2012 Dean sold his wine collection for $9,000, which is bought two years ago for $8,000.He also has a short-term capital loss carryover of $10,000 from 2009.1$48,000Property Transactions: Tax Return Due Tu 3/4/14Name: ___________Class time: ____________1. Use the worksheet below to calculate the MACRS depreciation amount for the manufacturingequipment and pick truck:2011:BusinessAssetDateAcquiredDateDisposedBasis forapplyingMACRSMACRSpercentage2011 MACRSDepreciationDeductionDateAcquiredDateDisposedBasis forapplyingMACRSMACRSpercentage2012 MACRSDepreciationDeductionBusinessEquipmentPick-upTruck2012:BusinessAssetBusinessEquipmentPick-upTruck2AccumulatedDepreciationAdjustedBasisProperty Transactions: Tax Return Due Tu 3/4/14Name: ___________Class time: ____________2. Summary Sheet for the Sales of Business Property (Form 4797)I) Sales or Exchanges of Property Used in a Trade or Business (Held for More Than 1 Year)Descriptionof propertyDateacquiredDate SoldGross SalesPriceDepreciationallowedCost/AdjustedBasisGain or (loss)A)B)C)D)II) Ordinary Gains and Losses (incl. property held 1 year or less). Enter zero if not applicable.Descriptionof propertyDateacquiredDate SoldGross SalesPriceDepreciationallowedCost/Adj.BasisGain or(loss)III) Gain from Disposition of Property Under Sections 1245 and 1250a. Descriptions of section 1245 property:1)Descriptionof property32)3)4)5)6)DateacquiredDateSoldGainDepreciationallowedAmount ofGainreported asOrdinaryIncome7)RemainingGain =(4) - (6)Property Transactions: Tax Return Due Tu 3/4/144Name: ___________Class time: ____________Property Transactions: Tax Return Due Tu 3/4/14Name: ___________Class time: ____________(Continued) Summary Sheet for the Sales of Business Property (Form 4797)b. Description of section 1250 property1)Descriptionof property2)3)4)56)DateacquiredDate SoldGainDepreciationallowedAmount ofGainreported as25% rateCapital gain7)RemainingGain =(4) - (6)IV) Section 1231 Netting Process1. Total amount reported on part I. (page 3) __________________________2. Total ordinary income reported on III.a _______________________3. Subtract line 2 from line 1, this is the amount of the remaining Section 1231 Gain ____________5Property Transactions: Tax Return Due Tu 3/4/14Name: ___________Class time: ____________3. Summary Sheet on the Sales of Capital Assets (Form 8949)I. Short-termDescriptionof propertyDateacquiredDate SoldGross SalesPriceDepreciationallowedCost BasisGain or(loss)DateacquiredDate SoldGross SalesPriceDepreciationallowedCost BasisGain or(loss)II. Long-termDescriptionof property6Property Transactions: Tax Return Due Tu 3/4/14Name: ___________Class time: ____________4. Summary Sheet for Capital Gains and Losses (Schedule D)1.Short-term totals from Form 8949 (page 5)2.Long-term totals from Form 8949 (page 5)3.Long-term totals from Form 4797, part IV). 3 onpage 4Short-term CapitalGains/Losses andcapital loss carryoversLong-term Capital Gain28%Net Capital Gain/Losses ____________725%15%Property Transactions: Tax Return Due Tu 3/4/148Name: ___________Class time: ____________Property Transactions: Tax Return Due Tu 3/4/14Name: ___________Class time: ____________5. Tax Computation1. Compute the self-employment tax for Dean Price in 2012Social security tax = 113,700*12.4% =Medicare tax = Schedule-C income*92.35%*2.9%=2. What is the amount of AGI for Dean Price in 2012?3.Assume that he has items deduction of $33,000 and claims one personal exemption. What is his 2012taxable income? The personal exemption amount for 2012 is $3,800.9Property Transactions: Tax Return Due Tu 3/4/14Name: ___________A. Capital Gains:1) Net 15% Rate Long-term capital gain_____________2) Net Unrecaptured Section 1250 Gain (25% Rate Gain) _____________3) Net Collectibles Gain _____________B. Ordinary Income Computation1) Realized Gain from disposition of property under Section 1245 ________2) Total ordinary income (including the amount in B.1 above):C. Tax Computation1)Tax on ordinary income (schedule X):____________2) Total Tax on Capital Gains: _____________3) Self-Employment Tax: __________________Add C.1 C.2 and C.3. This is the Total Tax: ___________10____________Class time


Paper#42853 | Written in 18-Jul-2015

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