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the Harlow Corporation-Determine the realized and recognized gain or loss on each of Harlow?s property transactions




Question;During the current year, the Harlow Corporation, which specializesDuring the current year, the Harlow Corporation, which specializes in commercialconstruction, has the following property transactions:a. In April, a tornado damages a crane and a dump truck at one of its constructionsites. The crane was acquired in 2009 for $120,000 and has an adjustedbasis of $39,650. The dump truck was acquired in 2007 for $70,000 and hasan adjusted basis of $33,880. The insurance company reimburses Harlow$35,000 for the crane and $42,000 for the dump truck. The company decidesnot to replace the dump truck and uses the insurance proceeds to purchase anew crane for $110,000.b. The company trades a road grader with a fair market value of $72,000 for abulldozer worth $60,000. Harlow receives $12,000 in the exchange. The roadgrader originally cost $90,000 and has an adjusted basis of $50,000. The bulldozercost $85,000, and its adjusted basis is $37,000.c. A fire destroys the company?s supply warehouse. The warehouse originally cost$300,000 and has an adjusted basis of $200,000. Its fair market value beforethe fire was $250,000. The insurance company pays Harlow $230,000, whichit uses to acquire a warehouse costing $280,000.d. The city of PeaceDale condemns land that Harlow had acquired in 1978 for$22,000 and held as an investment. The city pays Harlow the $195,000 fairmarket value of the land. Harlow uses the proceeds to acquire a commercialoffice park for $350,000.e. Harlow sells an automobile used by its president for business purposes for$10,000 to a local car dealership. The car originally cost $32,000, and itsadjusted basis is $15,000. The company had an agreement to replace the automobilewith a customized four-wheel-drive vehicle from a company that specializesin custom cars. However, the day the company sells the automobile, itis informed that the custom car company will not be able to deliver the vehiclefor at least 10 weeks. Harlow terminates its contract with the custom car companyand buys a new automobile from the local car dealership for $55,000.Determine the realized and recognized gain or loss on each of Harlow?s propertytransactions and the basis of any property acquired in each transaction.


Paper#43628 | Written in 18-Jul-2015

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