Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 17, Problem 55P
Jay sold three items of business equipment for a total of $300,000. None of the equipment was appraised to determine its value. Jay’s cost and adjusted basis for the assets are as follows:
Jay has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $300,000 to the buyer in this arm’s length transaction. How should Jay allocate the sales price and figure the gain or loss on the sale of the three assets?
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Jay sold three items of business equipment for a total of $300,000. None of the equipment was appraised to determine its value. Jay's cost and adjusted basis for the assets are shown below.
Asset
Cost
AdjustedBasis
Skidder
$230,000
$40,000
Driller
120,000
60,000
Platform
620,000
−0−
Total
$970,000
$100,000
Jay has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $300,000 to the buyer in this arm's length transaction.
b. If Jay treats the assets as a single group, determine the amount and nature of the gain or loss. There is an overall gain of $______ of which $________ is § 1245 gain.
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Frank's Mini Mart sold a piece of equipment on an installment agreement, to a competitor on the other side of town. The other owner failed to make the payments and Frank had to repossess the equipment. What is Frank's gain or loss on repossessed personal property with a fair market value of $12,000 on the date of repossession, where the seller's basis in the installment obligation at the time of repossession is $7,500, and the costs of repossession were $500?
(a) Loss of $500.
(b) Gain of $4,000.
(c) Gain of $4,500
(d) Gain of $5,000.
Barry sold depreciable property used in his business to Ken for $192,000 cash plus a bond redeemable in 5 years for $95,000, but currently trading on the NYSE for $98,000. The property cost Barry $310,000 plus $45,000 in capital improvements and had actual accumulated depreciation at the time of the sale of $225,000. The amount of accumulated depreciation he should have taken was $205,000.
Determine the amount of gain or loss recognized. Explain your conclusions including the various components of how you determined your answer.
Q.2
During 2019, Anna had the following transactions:
Salary $90,000
Interest income on IBM bonds 3,000
Damages for physical personal injury (car accident) 115,000
Punitive damages (same car accident) 150,000
Stock dividends from Chevron Corp Stock with option to receive
cash of $15,000 or stock valued at $22,000 (Anna opted to that the stock)
Q.3
Joseph exchanged farmhouse that he used in his farming business for a building used by Sandy in her…
Chapter 17 Solutions
Individual Income Taxes
Ch. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - A depreciable business dump truck has been owned...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - Prob. 11DQCh. 17 - Prob. 12DQCh. 17 - Prob. 13DQCh. 17 - Prob. 14DQCh. 17 - Prob. 15DQCh. 17 - Prob. 16DQCh. 17 - Prob. 17DQCh. 17 - Prob. 18DQCh. 17 - Prob. 19DQCh. 17 - Prob. 20DQCh. 17 - Prob. 21CECh. 17 - Prob. 22CECh. 17 - LO.3 Renata Corporation purchased equipment in...Ch. 17 - LO.3 Jacob purchased business equipment for 56,000...Ch. 17 - Sissie owns two items of business equipment. Both...Ch. 17 - Prob. 26CECh. 17 - Prob. 27CECh. 17 - LO.4 Enzo is a single taxpayer with the following...Ch. 17 - Prob. 29CECh. 17 - Prob. 30CECh. 17 - LO.1, 2 Jenny purchased timber on a 100-acre tract...Ch. 17 - Prob. 32PCh. 17 - LO.2 A sculpture that Korliss Kane held for...Ch. 17 - Prob. 34PCh. 17 - Prob. 35PCh. 17 - Prob. 36PCh. 17 - Prob. 37PCh. 17 - Prob. 38PCh. 17 - Prob. 39PCh. 17 - Prob. 40PCh. 17 - Prob. 41PCh. 17 - Prob. 43PCh. 17 - Joanne is in the 24% tax bracket and owns...Ch. 17 - Prob. 45PCh. 17 - Prob. 46PCh. 17 - Prob. 47PCh. 17 - Prob. 48PCh. 17 - Prob. 49PCh. 17 - Jasmine owned rental real estate that she sold to...Ch. 17 - Prob. 51PCh. 17 - Prob. 52PCh. 17 - Prob. 53PCh. 17 - Prob. 54PCh. 17 - Jay sold three items of business equipment for a...Ch. 17 - Prob. 1RPCh. 17 - Prob. 2RPCh. 17 - Prob. 3RPCh. 17 - Prob. 4RPCh. 17 - Prob. 1CPACh. 17 - Prob. 2CPACh. 17 - Jerry uses a building for business purposes. The...Ch. 17 - Prob. 4CPACh. 17 - Prob. 5CPACh. 17 - Prob. 6CPACh. 17 - Wally, Inc., sold the following three personal...Ch. 17 - Net Section 1231 losses are: a. Deducted as a...Ch. 17 - Prob. 9CPACh. 17 - Prob. 10CPA
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- On April 30, White sold land with a book value of $600,000 to Black for its fair value of $800,000. Black gave White a 12 percent, $800,000 note secured only by the land. At the date of sale, Black was in a very poor financial position and its continuation as a going concern was very questionable. white should...... a. Use the cost recovery method of accounting b. Record the note at its discounted value c. Record a $200,000 gain on the sale of the land d. Increase the allowance for uncollectibles for the full amount of the notearrow_forwardJoan sold depreciable property used in her business to Irene for $325,000 cash plus a ten year bond par value $200,000, and currently trading on the NYSE for $196,000. The property cost Joan $605,000 not including the $27,000 of capital improvements she made. During Joan’s ownership she erroneously deducted $315,000 of depreciation on the property and no depreciation on the improvements. The correct amount of depreciation that should have been deducted was $420,000 on the property and $12,000 on the improvements Determine the amount of recognized gain or loss.arrow_forwardLeonard and Arlene Warner sold the Warner Manufacturing Company to Elliott and Carol Archer for $610,000. A few months later the Archers sued the Warners in a state court for fraud connected with the sale. The parties settled the lawsuit for $300,000. The Warners paid the Archers $200,000 and executed a promissory note for the remaining $100,000. After the Warners failed to make the first payment on the $100,000 promissory note, the Archers sued for the payment in state court. The Warners then filed for bankruptcy of the Bankruptcy Code. The Archers claimed that the $100,000 debt was nondischargeable because it was for “money obtained by fraud.” Arlene Warner claimed that the $100,000 debt was dischargeable in bankruptcy because it was a new debt for money promised in a settlement contract and thus it was not a debt for money obtained by fraud.a. What are the arguments that the debt is dischargeable in bankruptcy?b. What are the arguments that the debt is not dischargeable in…arrow_forward
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