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Problem 73 Comprehensive Problem and Problem 85




Question;Problem;73;73.?During the current year, the Harlow;Corporation, which specializes in commercial construction had the following;property transactions. Determine the realized and recognized gain or loss on;each of Harlow?s property transactions and the basis of any property acquired;in each transaction.;a.?In April, a tornado damages a crane and a dump;truck at one of its construction sites. The crane was acquired in 2009 for;$120,000 and has an adjusted basis $39,650. The dump truck was acquired in 2007;for $70,000 and has an adjusted basis of $33,880. The insurance company;reimburses Harlow $35,000 for the crane and $42,000 for the dump truck. The;company decides not to replace the dump truck and uses the insurance proceeds;to purchase a new crane for $110,000.;b.?The company trades a road grader with a fair;market value of $72,000 for a bulldozer worth $60,000. Harlow receives $12,000;in the exchange. The road grader originally cost $90,000 and has an adjusted;basis of $50,000. The bulldozer cost $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 before the fire is $250,000. The insurance company pays;Harlow $230,000, which it 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 fair market value;of the land. Harlow uses the proceeds to acquire a commercial office 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 its adjusted basis is $15,000. The company had an agreement;to replace the automobile with a customized four-wheel-drive vehicle from a;company that specializes in custom cars. However, the day the company sells the;automobile, it is informed that the custom car company will not be able to deliver;the vehicle for at least 10 weeks. Harlow terminates its contract with the;custom car company and buys a new automobile from the local car dealership for;$55,000.85.?Calculate;Carmin?s adjusted gross income on her 2012 tax return. Then do one (or both) of;the following, according to your professor?s instructions;a.?Include a brief explanation of how you;determined each item that affected adjusted gross income and any items you;excluded from gross income. Your solution to the problem should contain a list;of each item included in gross income and its amount, with the explanations;attached.;b.?Write a letter to Carmin explaining how you;determined each item that affected adjusted gross income and any items you;excluded from gross income. You should include a list of each item included in;gross income and its amount.


Paper#51231 | Written in 18-Jul-2015

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