Chapter 11 assigned homework

Chapter 11 assigned homework - Sale of Residence: Gain

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Unformatted text preview: Sale of Residence: Gain Realization/Exclusion/Recognition 21. a. The Lindsays' basis of the residence at the time of the sale is $130,000 and their realized gain is $220,000 ($350,000 less $130,000). They may exclude the total $220,000 realized gain and therefore they have no recognized gain. b. The Lindsays have a realized gain of $570,000 ($700,000 less $130,000). They may exclude $500,000 and must recognize $70,000. The fact that they moved into another home is irrelevant and there is no opportunity to defer the $70,000 gain through an adjustment in the basis of the new residence as was the case under the old law. c. The Lindsays have a realized loss of $50,000, but none of it is recognized, since taxpayers are not allowed to deduct losses on the sale of personal-use assets. Sale of Residence: Gain Realization/Exclusion/Recognition 22. a. John has a realized gain of $475,000 ($650,000 less $175,000), but as a single individual, he can only exclude $250,000 and he must recognize $225,000. b. John's exclusion is still $250,000, and he must still recognize $225,000. The fact that he moved into another home is irrelevant and there is no opportunity to defer the $225,000 gain through an adjustment in the basis of the new residence as was the case under the old law. Sale of Residence: Pro-ration of Exclusion 23. a. The Millers have owned and used the home for less than two years, but because they are selling for a job-related reason, they may pro-rate the exclusion. The pro-rated amount of exclusion is $291,667 ($500,000 × 14 months divided by 24 months = $291,667). Since the realized gain is only $200,000 ($550,000 less $350,000), they can exclude the whole $200,000 and need not recognize any gain. b. The Millers have a realized gain of $400,000, of which $291,667 is excluded and the remaining $108,333 is recognized. Sale of Residence: Incapacitated Taxpayers 25. Arnold can exclude the $85,000 gain ($245,000 less $160,000) because the time he has spent in the nursing home is considered as time spent in his residence. Like-Kind Exchanges: Types 28. (a), (b), and (e) are like-kind exchanges. (c) is not a like-kind exchange because it is personalty for realty. (d) is not a like-kind exchange because inventory does not qualify under the like-kind provisions. Like-Kind Exchanges: Basis and Gain or Loss 29. Ben's realized and recognized gain is $1,300 and the basis of the new machine is $2,000. FMV of property received ($2,000 + $2,500). . . . . . . . . . . . . . . . . . . . . . . . . $ 4,500 Less: Adjusted basis of property given up . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Gain realized. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,300 Gain recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,300 Gain is recognized by Ben to the extent of boot received but not to exceed realized gain....
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This note was uploaded on 12/16/2008 for the course ACCT 102 taught by Professor Meyer during the Fall '08 term at Ohio University- Athens.

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Chapter 11 assigned homework - Sale of Residence: Gain

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