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Mirza_Assignment 3 - Ayesha Afzal Mirza Federal Income...

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Ayesha Afzal Mirza Federal Income Taxation FALB09 - Sec A Instructor: Joseph Poletti Assignment 3
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Chapter 7 1. a. Whether the property is sold for cash or on credit is not relevant for this purpose. The amount realized includes both the cash received at the time of sale and the cash to be received in the future (i.e., the payments made by the debtor). b. The mortgage assumption increases the amount realized by the seller. c. The assumption by the seller of the buyer’s mortgage decreases the amount realized by the seller. d. The buyer’s acquisition of the property subject to the mortgage of the seller increases the amount realized by the seller. e. The receipt of the stock worth $10,000 by the seller increases the amount realized by $10,000. 9. a. The basis for depreciation is the Donee’s gain basis = $26,000 – $12,000 = $14,000. b. $14,000 basis/2 years = $7,000. c. Loss basis = $9,000 (fair market value) – $7,000 (depreciation allowed) = $2,000 $1,500 (selling price) – $2,000 (adjusted basis) = $500 (recognized loss).
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