PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
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Chapter 8, Problem 43AP
To determine
Ascertain the tax consequences of the property disposition for the assumptions given.
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KNB sold real property to Firm P for $15,000 cash and Firm P’s assumption of the$85,000 mortgage on the property.Required: What is KNB’s amount realized on the sale?b. Compute KNB’s after-tax cash flow from the sale if its adjusted basis in the realproperty is $40,000 and its marginal tax rate is 35 percent.
KNB sold real property to Firm P for $15,000 cash and Firm P’s assumption of the $85,000 mortgage on the property.
Required:
What is KNB’s amount realized on sale?
Compute KNB’s after-tax cash flow from the sale if its adjusted basis in the real property is $40,000 and its marginal tax rate is 35 percent.
Firm R owned depreciable real property subject to a $300,000 nonrecoursemortgage. The property’s FMV is only $250,000. Consequently, the firm surrenderedthe property to the creditor rather than continuing to service the mortgage. At date ofsurrender, Firm R’s adjusted basis in the property was $195,000.Required:Determine Firm R’s cash flow consequences of the disposition, assuming that the gainrecognized is taxed at 21 percent.
Chapter 8 Solutions
PRINCIPLES OF TAXATION F/BUS.+INVEST.
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