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Quiz 3 Sp 11 Key - Total Points 2 8 Less Points Missed ACCT...

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Unformatted text preview: Total Points 2 8 Less Points Missed ACCT 403 I Score QUIZ 3 Spring 2011 NAME Kasai Directions — there are three questions worth a total of 29 points. The value of each is indicated at the end of each question. For questions 1 & 3 you must show our work to receive credit. 1. Bill’s business warehouse was destroyed by fire at a time when it was worth $350,000 and it had a basis of $180,000. The insurance company paid Bill $350,000. Six months later, he reinvested the insurance by rebuilding a new warehouse for $340,000. a. What is the amount of gain realized by Bill from this transaction? (1) AMT REA Liv/go 3379(— \ NR “gags-jg <1. 90%?) /0 @W (Zaim. \“”\o\é.( A ) b. What is the amount of gain recognized by Bill from this transaction? (2) c. What is Bill’ basis in his new warehouse? (2) NE.N w [email protected] " 2% lg LAN (2343673 QA—Eh/ molc« 1014 2<l (o0 KB G \ 93 K 2. Answer True/False to the following statements. [2 points each] F: a. In order to exclude gain from the sale of a personal residence, a taxpayer must replace the residence sold with a new personal residence within three years of selling the old residence. 1— b. If a taxpayer in the construction business exchanges a large piece of construction equipment for raw land on which to build a new office building for his business, the taxpayer may treat the transaction as a like kind exchange. l c. Individual partners of a partnership and individual shareholders of an S corporation both report their share of ordinary business income from the entity as ordinary income on their individual return (Form 1040) . e. Leasehold improvements to a commercial building are amortized over the term of the lease. A r— K f. Ah LLC member's personal assets are protected from lawsuits against the LLC's business assuming the member has not committed negligence. F5 k g. In order for a corporation to elect “S” status for a tax year it must file the election prior to the beginning of the tax year. i h. S Corporations may have both voting and non voting common stock outstanding. / 3. Sally owns a construction company. She purchased two assets for her business during 2010. First, she purchased an office building for $950,000 on August 1, of which $50,000 is allocated to the land. Second, she purchased new construction equipment for $1,200,000 on October 1. Assume that the construction equipment'has an ADR class life (mid—point) and ADS life of 6 years and a recovery period of 5 years. a. Compute the depreciation deduction for the building for Year 1 (2 points). K%LemQ/3?x (“r303 11 w‘ b ® Mi W Compute the maximum depreciation;eduction (including immediate expense and bonus depreciation) for the new construction equipment, for Years 1 and 2 under MACRS. (Round your answer to the nearest dollar) (4 points) VA E HG EWQYW(M1E%:§%C> ‘>< \[1 2K? 3573K @@ Wrwaaeasamgxwfi to Mango © . 222920629 \ {29‘ (lllmr‘aé’l..§00 >4 3‘ K L 2:— \.33\<...® W c. Compute the depreciation deduction for the new construction equipment for Years 1 & 2 assuming Sally wants to minimize (no immediate expense or bonus depreciation) her first year depreciation deduction (3 points). a? ' \(Ql Cam #5) XQ‘S/(L) 1 2.5000 0) L9 \(LL \KLM/Q, : 200‘003 CD *,...————~ 4% DiN Daugba, Comm 3:: 056 gems: Cd‘kklf-LNTDOM Ag gigy ...
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