BUSA427_Chapter11.docx - Chapter 11 Ch 11 Question 21 a Leonard and Lindas excluded gain is $220,000 since it does not exceed the $500,000 limit for

BUSA427_Chapter11.docx - Chapter 11 Ch 11 Question 21 a...

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Chapter 11 Ch. 11: Question 21 a. Leonard and Linda’s excluded gain is $220,000 since it does not exceed the $500,000 limit for married filing jointly. They must recognize $220,000. This can be calculated as follows: $100,000 Cost $350,000 Realized Amount $ 30,000 Improvements ($130,000) Basis $130,000 Basis $220,000 Gain b. Leonard and Linda’s excluded gain is $370,000 since it does not exceed the $500,000 limit for married filing jointly. They must recognize $370,000. This can be calculated as follows: $100,000 Cost $700,000 Realized Amount $200,000 New Purchase ($330,000) Basis $ 30,000 Improvements $370,000 Gain $330,000 Basis c. Leonard and Linda would recognize a $50,000 loss. This can be calculated as follows: $100,000 Cost $ 80,000 Realized Amount $ 30,000 Improvements ($130,000) Basis $130,000 Basis $ 50,000 Loss Ch. 11: Question 29The exchanges that qualify as a like-kind exchange are: a. Unimproved land for warehouseb. Factory for apartment buildinge. Computer for a printer
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Ch. 11: Question 33 a. Emma’s realized gain is $5,000 and her recognized gain is $5,000. Her basis in the new property is $23,000. This can be calculated as follows: $23,000 FMV $25,000 Old Basis $ 7,000 Boot ($ 7,000) Boot $30,000 $ 5,000 Gain ($25,000)
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