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
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This note was uploaded on 12/22/2010 for the course BUSACC 1242 taught by Professor Staff during the Spring '10 term at Pittsburgh.

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

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