PRINCIPLES OF TAXATION F/BUS...(LL)
23rd Edition
ISBN: 9781260433197
Author: Jones
Publisher: MCG
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Textbook Question
Chapter 7, Problem 3AP
Determine the tax basis of the business asset acquired in each of the following cases:
- a. Firm L paid $5,950 cash plus $416 sales tax plus a $500 installation charge for a satellite dish.
- b. TTP Inc. acquired inventory in exchange for 800 shares of TTP common stock listed on Nasdaq at $212 per share on the date of exchange.
- c. Firm Q acquired machinery in exchange for architectural drawings rendered by Firm’s Q’s junior partner. The partner spent 20 hours on the drawings, and his hourly billing rate is $350.
- d. Company C purchased equipment by paying $2,000 cash at date of purchase and financing the $18,000 balance of the price under a three-year deferred payment plan.
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Students have asked these similar questions
This year, Sigma, Incorporated generated $637,500 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
$ 165,200
110,800
Accumulated
Depreciation
$0
88,640
223,500
206,000
Marketable securities
Production equipment
Business realty:
Land
Building.
"Through date of sale.
Required:
a. 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.
b. Recompute taxable income assuming that Sigma sold the securities for $169,400 rather than $73,750.
Complete this question by entering your answers in the tabs below.
Sale Price
$ 73,750
38,000
0
61,800
236,750
231,000
Required A Required B
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.
Taxable income
In year 1, Firm A paid $49,000 cash to purchase a tangible business asset. In year 1 and year 2, it deducted $3,040 and $6,600
depreciation with respect to the asset. Firm A's marginal tax rate in both years was 21 percent.
Required:
a. Compute Firm A's net cash flow attributable to the asset purchase in each year.
b. Compute Firm A's adjusted basis in the asset at the end of each year.
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute Firm A's net cash flow attributable to the asset purchase in each year.
Note: Cash outflows should be indicated by a minus sign. Round your intermediate calculations and final answers to nearest
whole dollar amount.
Before-tax cash flows
Tax (cost) or savings
Net cash flow
Year 1
Year 2
Determine the tax basis of the business asset acquired in each of the following cases: Firm L paid $5,950 cash plus $416 sales tax plus a $500 installation charge for a satellite dish.TTP Inc. acquired inventory in exchange for 800 shares of TTP common stock listed on Nasdaq at $212 per share on the date of exchange. Firm Q acquired machinery in exchange for architectural drawings rendered by Firm’s Q’s junior partner. The partner spent 20 hours on the drawings, and his hourly billing rate is $350.Company C purchased equipment by paying $2,000 cash at date of purchase and financing the $18,000 balance of the price under a three-year deferred payment plan.
Chapter 7 Solutions
PRINCIPLES OF TAXATION F/BUS...(LL)
Ch. 7 - Prob. 1QPDCh. 7 - Assume that Congress enacted legislation requiring...Ch. 7 - Prob. 3QPDCh. 7 - To what extent do cost recovery deductions based...Ch. 7 - Can a firm have a negative tax basis in an asset?Ch. 7 - Prob. 6QPDCh. 7 - Corporation J manufactures electrical appliances....Ch. 7 - Identify the tax and nontax issues that firms must...Ch. 7 - Identify four possible differences in the...Ch. 7 - Prob. 10QPD
Ch. 7 - Prob. 11QPDCh. 7 - Prob. 12QPDCh. 7 - Prob. 13QPDCh. 7 - Prob. 14QPDCh. 7 - Prob. 15QPDCh. 7 - Prob. 16QPDCh. 7 - Prob. 17QPDCh. 7 - Prob. 18QPDCh. 7 - Prob. 1APCh. 7 - Assuming a 21 percent tax rate, compute the...Ch. 7 - Determine the tax basis of the business asset...Ch. 7 - ABC Company purchased business property several...Ch. 7 - Early this year, ZeZe Inc. paid a 52,000 legal fee...Ch. 7 - In year 1, Firm A paid 50,000 cash to purchase a...Ch. 7 - Prob. 7APCh. 7 - Hansen Company, a cash basis taxpayer, paid 50,000...Ch. 7 - In year 0, Jarmex paid 55,000 for an overhaul of a...Ch. 7 - Prob. 10APCh. 7 - Refer to the facts in problem 10. In its second...Ch. 7 - In its first year of operations, Lima Company...Ch. 7 - Prob. 13APCh. 7 - Herelt Inc., a calendar year taxpayer, purchased...Ch. 7 - Knute Company purchased only one asset during its...Ch. 7 - Prob. 16APCh. 7 - Suber Inc., a calendar year taxpayer, purchased...Ch. 7 - Prob. 18APCh. 7 - Prob. 19APCh. 7 - On May 12, 2018, Nelson Inc. purchased eight...Ch. 7 - In March 2018, Jones Company purchased a Mercedes...Ch. 7 - Margo, a calendar year taxpayer, paid 580,000 for...Ch. 7 - In 2019, Firm L purchased machinery costing 21,300...Ch. 7 - In 2018, Company W elected under Section 179 to...Ch. 7 - Prob. 25APCh. 7 - At the beginning of its 2019 tax year, Hiram owned...Ch. 7 - In April 2019, Lenape Corporation completed...Ch. 7 - Ajax Inc. was formed on April 25 and elected a...Ch. 7 - Prob. 29APCh. 7 - Mr. Z, a calendar year taxpayer, opened a new car...Ch. 7 - Prob. 31APCh. 7 - Prob. 32APCh. 7 - Prob. 33APCh. 7 - Prob. 34APCh. 7 - Prob. 35APCh. 7 - Prob. 36APCh. 7 - Prob. 37APCh. 7 - Prob. 1IRPCh. 7 - Prob. 2IRPCh. 7 - Prob. 3IRPCh. 7 - Prob. 4IRPCh. 7 - Prob. 5IRPCh. 7 - Prob. 6IRPCh. 7 - Prob. 7IRPCh. 7 - Prob. 8IRPCh. 7 - Prob. 9IRPCh. 7 - Prob. 10IRPCh. 7 - Prob. 1RPCh. 7 - Prob. 2RPCh. 7 - Prob. 3RPCh. 7 - Prob. 4RPCh. 7 - Prob. 1TPCCh. 7 - Prob. 2TPCCh. 7 - Prob. 3TPCCh. 7 - Prob. 4TPC
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