BUSA427_Chapter10.docx - Chapter 10 Ch 10 Question 23...

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Chapter 10 Ch. 10: Question 23 Albert Armstrong’s basis in the building at the time of sale was $450,000. It can be calculated as follows: $570,000 + $60,000 + $40,000 + $150,000 + $50,000 = $870,000 $870,000 - $420,000 = $450,000 basis Albert Armstrong’s realized gain on sale of the building is $350,000. His recognized gain on sale of the building is also $350,000 since no additional information was given. It can be calculated as follows: $800,000 - $450,000 = $350,000 Ch. 10: Question 28 Gail’s basis in the land is $112,500. Her basis in the building is $450,000. Her basis in each truck is $22,500 and $45,000. It can be calculated as follows: Land: $125,000 $630,000 x ($125,000 / $700,000) = $112,500 Building: $500,000 $630,000 x ($500,000 / $700,000) = $450,000 Truck 1: $ 25,000 $630,000 x ($ 25,000 / $700,000) = $ 22,500 Truck 2: $ 50,000 $630,000 x ($ 50,000 / $700,000) = $ 45,000 $700,000 combined FMV Ch. 10: Question 31 Naomi’s basis of preferred shares after the dividend is $4,444. Her basis of common shares is $3,556. It can be calculated as follows: FMV of Preferred Stock: 200 shares x $75 = $15,000 FMV of Common Stock: 200 shares x $60 = $12,000
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