Chapter 8 discussions

This preview shows pages 1–2. Sign up to view the full content.

3. Jocasta owns an apartment complex that she purchased 6 years ago for \$750,000; calculate the amount and  nature of the taxable gain on the sale (assuming he does not purchase a new residence). Jocasta owns an apartment complex that she purchased 6 years ago for \$750,000. Jocasta has made \$40,000 of  capital improvements on the complex, and her depreciation claimed on the building to date is \$150,000. Calculate  Jocasta’s adjusted basis in the building. Original Basis \$750,0 00 Plus: Capital Improvement \$40,00 0 Balance \$790,0 00 Less: Accumulated depreciation \$150,0 00 Balance (Adjusted Basis) \$640,0 00 13. William sold Section 1245 property for \$25,000 in 2009.  The property cost \$35,000 when it was purchased 5  years ago.  The depreciation claimed on the property was \$16,000.    Please answer 1 letter below at a time.   a.) Calculate the adjusted basis of the property

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: \$25,000-\$16,000=\$9,000 (Adjusted basis) b.) Calculate the recomputed basis of the property \$9,000+\$16,000=\$25,000 (Recomputed basis) c.) Calculate the amount of ordinary income under Section 1245. Ordinary gain \$35,000-\$9,000=\$26,000 (ordinary gain) d.) Calculate the Section 1231 gain \$26,000-\$16,000=\$10,000 (section 1231 gain) 11. Teresa's manufacturing plan is destroyed by fire. The plant has an adjusted basis of \$260,000, and Teresa receives insurance proceeds of \$400,000 for the loss. Teresa reinvests \$425,000 in a replacement plant. a.) Calculate Teresa's recognized gain if she elects to utilize the involuntary conversion provision. 400,000 – 425,000 = 0 b.) Calculate Teresa's basis in the new plant. Reinvestments \$425,000 Less: Adjusted basis \$260,000 Balance \$165,000 Less: 25,000 (extra over insurance) \$25,000 Realized Gain \$140,000...
View Full Document

{[ snackBarMessage ]}