Chapter 8 discussions - $25,000-$16,000=$9,000(Adjusted...

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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
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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...
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Chapter 8 discussions - $25,000-$16,000=$9,000(Adjusted...

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