Business_taxation_solutions_Chpt9

Business_taxation_solutions_Chpt9 - WEEK 6 Assignment-Chpt...

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WEEK 6 Assignment-Chpt 9 1. a. Realized gain $6,700 ($16,000 amount realized – $9,300 tax basis); recognized gain $6,700; tax basis in new equipment $16,000 cost. b. Realized gain $6,700 ($16,000 amount realized – $9,300 tax basis); recognized gain -0-; tax basis in new equipment $9,300 substituted basis. c. If the exchange was taxable, gain recognized on sale of the new equipment is $850 ($16,850 amount realized – $16,000 tax basis). If the exchange was nontaxable, gain recognized on sale of the new equipment is $7,550 ($16,850 amount realized – $9,300 tax basis). 4. a. Realized gain $12,000; recognized gain $12,000; tax basis in new asset $32,000. b. Realized gain $12,000; recognized gain -0-; tax basis in new asset $20,000. c. In this case, the old asset must be worth only $30,300. Realized gain $10,300; recognized gain $10,300; tax basis in new asset $32,000. d. Realized gain $10,300; recognized gain $-0-; tax basis in new asset $21,700. e. In this case, the old asset must be worth $36,500. Realized gain $16,500; recognized gain $16,500; tax basis in new asset $32,000. f. Realized gain $16,500; recognized gain $4,500; tax basis in new asset $20,000. 7. a. Neil’s book gain is $327,400 ($932,000 amount realized – $604,600 book basis). Neil’s tax gain is $359,000 ($932,000 amount realized – $573,000 tax basis). b. Neil’s book and tax basis in the investment asset equal the $932,000 cost of the asset.
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