Kimberly sold equipment that she uses in her business for $50,000. Kimberly bought the equipment two years ago for $60,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Kimberly's gain or loss? Multiple Cholce $30,000 section 1231 gain. $20,000 ordinary gain. $5,000 ordinary gain, and $15,000 section 1231 gain.

Kimberly sold equipment that she uses in her business for $50,000. Kimberly bought the equipment two years ago for $60,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Kimberly's gain or loss? Multiple Cholce $30,000 section 1231 gain. $20,000 ordinary gain. $5,000 ordinary gain, and $15,000 section 1231 gain.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter17: Property Transactions: §1231 And Recapture Provisions

Section: Chapter Questions

Problem 23CE: LO.3 Renata Corporation purchased equipment in 2017 for 180,000 and has taken 83,000 of regular...

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LO.1 Anne sold her home for 290,000 in 2019. Selling expenses were 17,400. She purchased it in 2013 for 200,000. During the period of ownership, Anne did the following. Deducted 50,500 office-in-home expenses, which included 4,500 in depreciation. (Refer to text Section 9-6a). Deducted a casualty loss in 2015 for residential trees destroyed by a hurricane (her county was declared a Federal disaster area). The total loss was 19,000 (after the 100 floor and the 10%-of-AGI floor), and Annes insurance company reimbursed her for 13,500. (Refer to text Section 7-3.) Raid street paving assessment of 7,000 and added sidewalks for 8,000. Installed an elevator for medical reasons. The total cost was 20,000, and Anne deducted 13,000 as medical expenses. (Refer to text Section 10-lb.) What is Annes realized gain?
LO.4 Marilyn owns land that she acquired three years ago as an investment for 250,000. Because the land has not appreciated in value as she anticipated, she sells it to her brother, Amos, for its fair market value of 180,000. Amos sells the land two years later for 240,000. a. Explain why Marilyns realized loss of 70,000 (180,000 amount realized 250,000 adjusted basis) is disallowed at the time of the sale to her brother. b. Explain why Amos records neither a recognized gain nor a recognized loss on his sale of the land. c. How does the related-party disallowance rule affect the total gain or loss recognized by the family unit? d. Which party wins and which party loses, in a tax sense? e. How could Marilyn have avoided the loss disallowance on her sale of the land?
LO.3 Renata Corporation purchased equipment in 2017 for 180,000 and has taken 83,000 of regular MACRS depreciation. Renata Corporation sells the equipment in 2019 for 110,000. What is the amount and character of Renatas gain or loss?
LO.1, 2 Jenny purchased timber on a 100-acre tract of land in South Dakota in March 2017 for 100,000. On January 1, 2019, the timber had a fair market value of 145,000. Because of careless cutting in November 2019, when the fair market value was 158,000, the wood was sold on January 30, 2020, for 98,000. a. What gain (loss) was recognized in 2018, 2019, and 2020 if Jenny elected to treat the cutting as a sale? b. What was the nature of the gains (losses) in part (a)? c. Does the answer change if the timber was sold in December 2019? Why or why not? d. If the timber was worth only 58,000 on January 1, 2019, was cut in November when it was worth 33,000, and was sold in December for 59,000, how would the answers to parts (a) and (b) change?