State whether the equipment is a capital asset.

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Answer 1

Question

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

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Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1 September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and the cost of construction was $100,000. Immediately, after the construction finished, the property has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000. With reference to relevant legislation/case law, determine Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount method and Indexation method. How would your answer to a) differ if the owner of the property was a company instead of Alex

Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1 September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and the cost of construction was $100,000. Immediately, after the construction finished, the property has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000.Required: With reference to relevant legislation/case law, determine:a) Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount method and Indexation method. b) How would your answer to a) differ if the owner of the property was a company instead of Alex? (maximum 100 words)

Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1 September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and the cost of construction was $100,000. Immediately, after the construction finished, the property has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000. Required: With reference to relevant legislation/case law, determine: a) Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount method and Indexation method. (b) How would your answer to a) differ if the owner of the property was a company instead of Alex

Answer 2

Question

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

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Answer 3

Question

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

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Answer 4

Question

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

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Answer 5

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

Answer 6

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

Answer 7

Chapter 17, Problem 1DQ

To determine

State whether the equipment is a capital asset.

Answer 8

Expert Solution & Answer

Explanation of Solution

Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.

Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the depreciable farm equipment is not treated as a capital asset as it is depreciable property that is used in a business or trade. Property like this, held more than 12 months, is a Section 1231 asset. Moreover, Section 1231 exactly defines such property as not being a capital asset.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 17 - Prob. 1DQ Ch. 17 - Prob. 2DQ Ch. 17 - Prob. 3DQ Ch. 17 - Prob. 4DQ Ch. 17 - Prob. 5DQ Ch. 17 - A depreciable business dump truck has been owned...Ch. 17 - Prob. 10DQ Ch. 17 - Prob. 11DQ Ch. 17 - Prob. 12DQ Ch. 17 - Prob. 13DQ

State whether the equipment is a capital asset.

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State whether the equipment is a capital asset.

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