Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 8, Problem 20MCQ
To determine
Introduction:When exchange of property takes place between taxpayers, the gain or loss on such exchange is
To choose:The correctbasis in equipment received by S assuming basis in the equipment given up was $12,000.
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Alvarez and Reymond, both NGAs, exchanged their equipment. Relevant data is presented below
Alvarez
Reymond
Carrying amount
85,000
130,000
Fair value
95,000
115,000
Cash paid by Alvarez to Reymond
15,000
How much is the initial measurement of the equipment received by Reymond if the exchange has a commercial substance?
Refer to the previous question, how much is the gain (loss) recognized by Reymond?
(7) Refer again to Chapter 12, section 12-4, LIKE-KIND EXCHANGES.
Mr. X owned an apartment building. He exchanged it for Ms. Y’s mansion, which Mr. X remodeled and uses as his office for his Schedule C accounting practice.
Here are some additional facts:
Mr. X’s adjusted basis in his apartment building was $1,400,000.
Ms. Y’s adjusted basis in her mansion was $2,250,000.
No cash or other / additional consideration passed in either direction in connection with the exchange.
Neither property was encumbered by any debt.
On the county property tax rolls, Mr. X’s apartment building was listed at a value of $3.25 million.
On the county property tax rolls, Ms. Y’s mansion was listed at a value of $3.6 million.
At the time of the exchange and for years before, Ms. Y actually lived in her mansion; it was strictly her personal residence – she never carried on any trade or business there, nor did anything else that ever would have re-sulted in classification of the mansion as anything…
Company A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance.
How much gain or loss should be recorded by Company A?
a. P60,000 gain
b. P30,000 loss
c. P120,000 loss
d. P120,000 gain
Chapter 8 Solutions
Income Tax Fundamentals 2020
Ch. 8 - Alice purchases a rental house on August 22,2019,...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - James purchased office equipment for his business....Ch. 8 - Which of the following statements with respect to...Ch. 8 - Which of the following is not true about the MACRS...Ch. 8 - On July 20,2019, Kelli purchases office equipment...Ch. 8 - Which of the following is not considered a limit...Ch. 8 - In 2019, Ben purchases and places in service a new...Ch. 8 - In 2019, Ben purchases and places in service a new...
Ch. 8 - Prob. 11MCQCh. 8 - Prob. 12MCQCh. 8 - Prob. 13MCQCh. 8 - In 2019, Mary sells for $24,000 a machine used in...Ch. 8 - Prob. 15MCQCh. 8 - Prob. 16MCQCh. 8 - Virginia has business property that is stolen and...Ch. 8 - Pat sells land for $25,000 cash and a $75,000...Ch. 8 - Prob. 19MCQCh. 8 - Prob. 20MCQCh. 8 - Oscar owns a building that is destroyed in a...Ch. 8 - Prob. 22MCQCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - 3. Mike purchases a new heavy-duty truck (5-year...Ch. 8 - On March 8,2019, Holly purchased a residential...Ch. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Calculate the following: The first year of...Ch. 8 - During 2019, William purchases the following...Ch. 8 - On February 2,2019, Alexandra purchases a personal...Ch. 8 - On September 14,2019, Jay purchased a passenger...Ch. 8 - Tom has a successful business with $100,000 of...Ch. 8 - Prob. 14PCh. 8 - Annie develops a successful tax practice. She...Ch. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21P
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- 1. Tainan company decides to exchange its old machine and $2,600,000 cash for a new machine. The old machine has a book value of $1,400,000 and a fair value of $2,400,000 on the date of the exchange. If this transaction has commercial substance, the cost of the new machine would be recorded at a.$4,000,000. b.$2,600,000. c.$5,000,000. d.cannot be determined. 2. Belpre Inc. constructed a new office building. Building material costs for the new building were $3,000,000; total labor costs were $2,500,000; total company overhead was $9,000,000 (25% of which could be assigned to the new project); and interest paid on a new construction loan for the project was $1,250,000. Calculate the total cost of the self-constructed building.arrow_forwardSammy exchanges land used in his business in a like-kind exchange. The property exchanged is as follows: Property Surrendered Property Received Adj. Basis FMV Adj. Basis FMV Land $44,000 $60,000 $50,000 $43,000 Cash $ 5,000 $ 5,000 Liability on land $12,000 $12,000 The other party assumes the liability. A. What is Sammy’s recognized gain or loss? Explain your answer. b. What is Sammy’s basis for the assets he received?arrow_forward26. Love Inc. and Life Co. have an exchange with no commercial substance. The asset given up by Love Inc. has a book value of P12,000. The asset given up by Life Co. has a book value of P20,000. Cash of P4,000 is received by Life Co. What amount should Love Inc. record for the asset received? CHOICES: P20,000 P23,000 P19,000 P16,000arrow_forward
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