chpt 17 HW solutions

# chpt 17 HW solutions - Individual Tax Accounting 2011...

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Individual Tax Accounting – 2011 edition Chapter 17 Homework Solutions 42. a. Land: Condemnation proceeds \$25,000 Allocable basis (40,000) Realized and recognized § 1231 loss (\$15,000) Truck: Depreciation taken: \$3,491 (\$6,000 – \$2,509). Adjusted basis: \$2,509. Realized gain: \$3,500 – \$2,509 = \$991. Recognized gain: \$991 ordinary income under § 1245. Rowing machine: Realized and recognized gain = Amount realized – Adjusted basis of machine on date of sale = \$3,900 – \$0 = \$3,900. Section 1245 recapture = Amount of depreciation claimed (\$5,200) or gain recognized (\$3,900), whichever is less = \$3,900. Apartment building: Realized gain = Amount realized – Adjusted basis = \$200,000 – \$124,783 = \$75,217. Section 1231 gain recognized = \$75,217. No § 1250 recapture is recognized because the taxpayer used the straight-line method of depreciation. Of the \$75,217 § 1231 gain, \$25,217 is unrecaptured § 1250 gain because the depreciation taken of \$25,217 (\$150,000 cost – \$124,783 basis) is less than the \$75,217 recognized gain. Yacht: Personal casualty loss (without regard to the 10% of AGI limitation) = Fair market value at date of theft – Insurance proceeds – Floor = \$19,600 – \$12,500 – \$100 = \$7,000.

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