AC553_W7_Solution12_46

AC553_W7_Solution12_46 - ($ 250) What are the net tax...

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1 Problem 12-46 Solution Section 1231 Assets: Nettings Barbara Bliss had the following recognized gains and losses during 2007: Casualty items: Business casualty gain (property held 5 months) . .......................... $ 100 Business casualty loss (property held 19 months) . ........................ ($ 200) Business casualty gain (property held 21 months) . ......................... $ 500 Section 1231 gain . ........................................................................... $ 750 1231 loss . ....................................................................................... ($ 600) LTCL . ............................................................................................ ($4,000) STCL . ..............................................................................................
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Unformatted text preview: ($ 250) What are the net tax consequences of these gains and losses for Barbara? Solution: Barbaras adjusted gross income is $30,000 without considering the above items Section 1231 Assets: Nettings (12,645) The business casualty gain on the property held five months is ordinary income. The other two casualty items are netted in the first netting to yield a $300 gain ($500 1 $200) which is carried to the second netting. There is a net gain of $450 on the second netting ($300 + $750 1 $600) which is long-term capital gain. This results in a net LTCL of $3,550 and a net STCL of $250. The deduction for Barbara is $3,000 with a LTCL carryover of $800. Her adjusted gross income is $27,100 ($30,000 1 $3,000 + $100)....
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This note was uploaded on 02/21/2012 for the course ACCOUNTING 553 taught by Professor James during the Spring '12 term at DeVry Phoenix.

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