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

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 29 The exchanges that qualify as a like-kind exchange are: a. Unimproved land for warehouse b. Factory for apartment building e. Computer for a printer

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)

You've reached the end of your free preview.

Want to read both pages?

Unformatted text preview: Adjusted Basis $23,000 New Basis $ 5,000 Gain b. Lily’s realized gain is $3,000 and she does not have a recognized gain since there is not a recognized gain allowed when a boot is given. Her basis in the new property is $27,000. This can be calculated as follows: $30,000 FMV $20,000 Old Basis ($ 7,000) Boot $ 7,000 Boot ($25,000) Adjusted Basis $27,000 New Basis $ 3,000 Gain Ch. 11: Question 50 a. Seller’s realized gain is $80,000 and he does not have a recognized gain since the replacement cost is greater than the insurance proceeds. The basis of the replacement clothing store is $145,000. This can be calculated as follows: $200,000 Insurance Award $225,000 Replacement ($120,000) Adjusted Basis ($ 80,000) Gain $ 80,000 Gain $145,000 Replacement Basis b. Seller’s realized gain is $80,000 and his recognized gain is $80,000. Since this is not a like-kind exchange, there is not a basis of the replacement. The gain is the same calculation as above. Ch. 11: Question 52 The basis of the new truck is: d. $46,400. This can be calculated as follows: $14,000 Adjusted Basis $40,000 New Truck ($ 8,000) Trade-in Allowance $ 6,400 Gain $ 6,400 Gain $46,400 New Basis...
View Full Document