This year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Accumulated Depreciation* Sale Price Marketable securities $ 182,000 $ 0 $ 64,500 Production equipment 96,800 77,440 50,750 Business realty: Land 214,500 0 234,250 Building 248,000 74,400 243,000 *Through date of sale. Required: Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. Recompute taxable income assuming that Sigma sold the securities for $188,500 rather than $64,500.
This year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Accumulated Depreciation* Sale Price Marketable securities $ 182,000 $ 0 $ 64,500 Production equipment 96,800 77,440 50,750 Business realty: Land 214,500 0 234,250 Building 248,000 74,400 243,000 *Through date of sale. Required: Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. Recompute taxable income assuming that Sigma sold the securities for $188,500 rather than $64,500.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter5: Business Deductions
Section: Chapter Questions
Problem 51P
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Question
This year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months:
| Initial Basis | Accumulated |
Sale Price | |
|---|---|---|---|
| Marketable securities | $ 182,000 | $ 0 | $ 64,500 |
| Production equipment | 96,800 | 77,440 | 50,750 |
| Business realty: | |||
| Land | 214,500 | 0 | 234,250 |
| Building | 248,000 | 74,400 | 243,000 |
*Through date of sale.
Required:
- Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses.
- Recompute taxable income assuming that Sigma sold the securities for $188,500 rather than $64,500.
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