Ch 14 Extra Problems

Ch 14 Extra Problems - 30. a. Original basis of land...

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30. a. Original basis of land $ 50,000 Original basis of house 200,000 Less: Depreciation (30,900) Adjusted basis of house and land $219,100 Original basis of tennis court $ 5,000 Less: Depreciation (1,300) Adjusted basis of tennis court $ 3,700 Amount realized $400,000 Less: Adjusted basis ($219,100 + $3,700) (222,800) Realized gain $177,200 b. Amount realized [$400,000 (cash) + $75,000 (mortgage)] $475,000 Less: Adjusted basis (222,800) Realized gain $252,200 c. Same answer as in part b. above. pp. 14-3 to 14-5 34. a. The $50,000 distribution is labeled a return of capital because Dove has no earnings and profits. Butch reduces the basis of his stock by $50,000 to $20,000 ($70,000 adjusted basis – $50,000 return of capital distribution). b. As in a., the $140,000 distribution is treated as a return of capital because Dove has no earnings and profits. Butch has a capital gain calculated as follows: Amount realized $140,000 Less: Adjusted basis (70,000) Realized gain $ 70,000 Recognized gain $ 70,000 The basis for his stock is reduced to $0. c.
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This note was uploaded on 05/31/2011 for the course ACCT 421 taught by Professor May during the Spring '11 term at IPR.

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Ch 14 Extra Problems - 30. a. Original basis of land...

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