Loose Leaf for McGraw-Hill's Taxation of Individuals and Business Entities 2019 Edition
10th Edition
ISBN: 9781260189728
Author: Brian C. Spilker Professor, Benjamin C. Ayers, John Robinson Professor, Edmund Outslay Professor, Ronald G. Worsham Associate Professor, John A. Barrick Assistant Professor, Connie Weaver
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 42P
Brittany started a law practice as a sole proprietor. She owned a computer, printer, desk, and file cabinet she purchased during law school (several years ago) that she is planning to use in her business. What is the
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Erin's bank foreclosed on her office building when she stopped making payments on her loan. The loan was secured by the building when she purchased it three years ago for $750,000. Erin's Form 1099-A is shown
below.
If the building is sold for the fair market value (FMV), how much of Erin's personal assets can the lender attempt to collect to satisfy the judgment? (Answer choices are below the image.)
LENDER'S name, street address, city or town, state or province, country, ZIP or
foreign postal code, and telephone no.
OAK RIDGE BANK
301 AUSTIN STREET
YOUR CITY, YS XXXXX
(XXX) 555-5678
LENDER'S TIN
XX-XXXXXXX
BORROWER'S name
ERIN HERNANDEZ
Street address (including apt. no.)
308 VIRGINIA AVENUE
CORRECTED (if checked)
BORROWER'S TIN
XXX-XX-XXXX
Account number (see instructions)
XXXXXXXX
Form 1099-A (Rev. 1-2022)
City or town, state or province, country, and ZIP or foreign postal code
YOUR CITY, YS XXXXX
(keep for your records)
$615.000
$595,000
$20,000
OSO (None of Erin's personal…
Meg O'Brien received a gift of some small-scale jewelry manufacturing equipment that her father had used for personal purposes for many years. Her father originally purchased the equipment for $1,640. Because the equipment is out of production and no longer available, the property is currently worth $5,750. Meg has decided to begin a new jewelry manufacturing trade or business.
What is her depreciable basis for depreciating the equipment?
Blaine is a practicing dentist. He operates his business from the basement of his house, with a
separate entrance and facilities. Blaine uses the simplified method every year to calculate his
business-use-of-home deduction. How will he calculate his depreciation for recapture when he sells
the house?
He will divide the basement square footage by the total square footage, multiply that percentage by the
fair market value, and use the depreciation tables to calculate allowable depreciation to be recaptured.
He will take the total fair market value of the home and use the depreciation tables to calculate allowable
depreciation to be recaptured.
Blaine has no depreciation to recapture. He uses the simplified method every year which means his
depreciation is considered to be zero.
Blaine will use Form 4797 to calculate the allowable depreciation amount and recapture that amount.
C
Chapter 10 Solutions
Loose Leaf for McGraw-Hill's Taxation of Individuals and Business Entities 2019 Edition
Ch. 10 - Explain why certain long-lived assets are...Ch. 10 - Prob. 2DQCh. 10 - Explain the similarities and dissimilarities...Ch. 10 - Is an assets initial or cost basis simply its...Ch. 10 - Prob. 5DQCh. 10 - Explain why the expenses incurred to get an asset...Ch. 10 - Graber Corporation runs a long-haul trucking...Ch. 10 - What depreciation methods are available for...Ch. 10 - If a business places several different assets in...Ch. 10 - Prob. 38P
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- Kase, an individual, purchased some property in Potomac, Maryland, for $228,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase’s Maryland property. Kase agrees to the exchange.What is Kase’s realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. The transaction qualifies as a like-kind exchange and the fair market value of each property is $770,000.arrow_forwardKase, an individual, purchased some property in Potomac, Maryland, for $152,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase's Maryland property. Kase agrees to the exchange. What is Kase's realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? Note: Loss amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable. Problem 11-56 Part-b (Algo) b. The transaction qualifies as a like-kind exchange, and the fair market value of each property is $116,000.arrow_forwardKase, an individual, purchased some property in Potomac, Maryland, for $150,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase’s Maryland property. Kase agrees to the exchange. What is Kase’s realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. The transaction qualifies as a like-kind exchange, and the fair market value of each property is $675,000.arrow_forward
- Barbara sold land she purchased three months earlier for use in her business. Her cost and adjusted basis in the land prior to the sale were $80,000. She also incurred $10,000 in expenses related to the sale. The buyer paid $80,000 cash and assumed barbarous 20,000 mortgage on the property. What is the amount of Barbara's gain, and where on form 4797 will she report the sale?arrow_forwardThis year, Amy purchased $4,200 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. c. Suppose that after the accident, Amy could not replace the equipment so she had the equipment repaired for $3,900. What amount can Amy deduct for the loss of the equipment? Deductible amountarrow_forwardaRhonda owns an office building that has an adjusted basis of $45,000. The building is subject to a mortgage of $20,000. She transfers the building to Miguel in exchange for $15,000 cash and a warehouse with an FMV of $50,000. Miguel assumes the mortgage on the building. Required: What are LaRhonda’s realized and recognized gain or loss? What is her basis in the newly acquired warehouse?arrow_forward
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