Chapter 11 & Part 3 w Solutions

Chapter 11 & Part 3 w Solutions - Burkett — Tax 1 —...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Burkett — Tax 1 — Chapter 11 & 3 Section 1231 Netting . Joe sells 2 parcels of land that he used for storage in his business. Both have been held for longer than one year. Net assuming these are his only property transactions and compute tax or tax savings assuming a 25% MTR. NET ‘13} 6&3“) Gain on parcel 1 is $20,000 -\ g S T‘Qgfi‘m D kin-Larc- (:9 ‘00:) * m- —-‘ N—ET Loss on Parcel 2 @ISflOD / xx? _' “Vex age What if Joe had a $10,000 1231 loss two years ago that was treated as an ordinary loss and no 1231 transactions since? gain $29» (3634:; khxh gag/M2, waéwclriQ’mEM/e/ a! $4 air... (.9th W35) L435”/ V231)? Lu 13 S Asa/xv: Change parcel 2 to a $25,000 loss N4“ 03 ) Lain!— P E Zaioo‘a Wmm ($10007 TQ—EAT'E-D 0L5 9 2. {$933037 / 0(20 LOSS" 74 25"? \ rBurkett—Tax 1 —Chapter I! & 3 Adjusted Net Capital Gain (Outline Example) TP Jones is a taxpayer in the 35% tax bracket and has the following capital gains and losses in the current year: 333312;“; 22-5321 if? - 359133) N?) (we oa‘fs m. Collectibles gain 15,000 ~ @ -. ,. , Collectibles loss (5,000) N‘g/ \0-003 90” OlAW 11132312173353: {5133 1521333) @‘ 9m“ “ma c Affect on AGI? N L? C a: _\ %00@ "fax ? ‘ N a as ' fl uroo’ofg rues-3’ 29% flow COM’N' \0"0d3@ STCK Q‘Jt 005? W<efi® u: AM New CAP QMM L+000 y lSda) @O (9 “(H-6.46. $5 No Alfiafl age/x) M +o~va4C° ' M Burkett — Tax 1 H Chapter 11 & 3 Adjusted Net Capital Gain (2) TP Jones is a taxpayer in the 35% tax bracket and has the following capital gains and losses in the current year: 332312;: 2251:: at $33£8§Ev w w 3% 8211:3333: 2538359 car-m 1:33:1222225321 12%?)er gm; (:9 “we Affect on AGI‘? Jr DOOMQ Tax ? ' Meme \Wlomai 334g : qfigoo {Q-F'v‘ 7— 3—- 2‘ i300 L-J‘éca ' 6.0036934 (“5"th : \100 "32000® _ fits—w erg; Burkett— Tax 1 — Chapter 1] & 3 Individual Capital Loss Single taxpayer with 25% MTR has the capital gains & losses listed below for 2010. How much loss can be deducted? NetSTCG $10K ' ' \ . - @- (“SK/r NULL. fl NetLTCL ($15R7 ' CD ' 3K MM CM? L055" (392,0 I..an :9 2:; use}... do What type of deduction? Emh . @QQ Lg Sit" ‘Tax savings “gm: “A 1: a.“ In 2011 TP has a net LTCG "ofsloK. How is this affected by 2010? Tax? \\?r are“ we; a sfio/tw. tame LNKECQ; (Si-‘0‘? Q35) N mesa»; Burkett — Tax 1 — Chapter 11 & 3 Gain (Loss) from Security Transactions Assume taxpayer A sells 100 shares of stock on ilwllo for $1,200 ($12/share). Taxpayer A had purchased 100 shares in 1987 for $6/share and 150 shares in 199.8 for $15/share. Assume a 25% MTR and this is the only capital transaction How much gain would Taxpayer A recognize? (2 options) FIFO: _ 69$? 4922643 élavage) gags??- @LLQ o9 wage “($9194 14,003 LA“ <1" C3 C9 0:: ‘ >< Tat/ism 53} C‘\ 0 Specific ID: awe-Ea Wraaerafi gvbo.) @5533 'ar‘ralsé an 51% ivoya‘lgifiga (67705 43230 > \L 23"”? Maw / I . Dag—€24,158? m..TA>z. 19$" “ Burkett — Tax 1 — Chapter 1 l & 3 Sale of Personal Property (Section 1245 Property) All gain or losses on property held _<_ one year is ordinary gain (loss). Gain on the sale of Personal Proper_ty {Section 1245 Proper_ty) held longer than one year is ordinary income to the extent of depreciation allowed. Any additional gain is a Section 1231 Gain. Section 1231 gains & losses are netted. A net 1231 Gain is treated as a LTCG & net losses are treated as ordinary losses. Sale of Equipment A B C Sale price $15,000 $40,000 $70,000 Cost 50,000 50,000 50,000 Depreciation Allowed d 25,000 > ( Adj Basis Egrow ‘2”:00‘9 25‘, 023 Total Gain (Loss) _ <\ GOLD-‘2‘) “is: 003 ' :6 00:] Ordinary Income »\ A I -—~ Depreciation Recapture IO 23"003 5 " 030 Sect 1231 Gain(Loss) <l0. 0037 —e-— _ 20. it -- \0 .000 Tax assuming 25% MTR & only property transactions? é n+8“: 0.31, :g'ui-mc. \L 25"? '2 Sim, oco Mergers» am ewe-500M134 -=- MS‘OD Why does the tax law require the depreciation recapture to be treated as ordinary Income? TR Qixlu M 0202K A21; MOWDZW’ Pm. [email protected] What are the section 1231 gains on the properties that have gains equal to? Hi 903.98.004- C “=— @A m SQanS‘ 190,525,; 6.... 0,3, gag?» ' _ $10K... “33:31.5. aaf$20 KG) Burkett fTax I - Chapter I l Unrecaptured Section 1250 Gain Katie sells a building she has used in her accounting practice for 10 years. Sales price allocated to the building is $250,000, cost was $150,000 & Allowed straight line depreciation is $40,000. Sales price allocated to the land is $100,000 w/ original cost of $50,000. Her MTR is 28% Gain (loss) & character of for building & land? E22 Wm fifimv mega “2.322 K’s. “1 Wk @0395“ Cos"? \TGM. ' :3“;- 5 M) 617%me MMZD a) - gem, _< | h WW VQML. Gar-W. Mom... 60‘; [Crop doe c m raga gs’fljé) “'3‘” i0“, §V§i3l am WW 577K Wok Tax on gains if this is her only property transaction? uK-QQCA- ‘7/‘3’3 é“:o\¢>k‘2§”‘”7 3 éhaw?) N$.T‘§\\;3\ aLS‘Ce 3.; \S‘D\¢$~ N4 ' 1%333 _ ' g2“ SHED 7 ...
View Full Document

This note was uploaded on 02/22/2012 for the course ACCT 403 taught by Professor White during the Spring '11 term at South Carolina.

Page1 / 7

Chapter 11 & Part 3 w Solutions - Burkett — Tax 1 —...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online