Margo Manor has a Victorian style residence with an adjusted basis of 200000

Margo manor has a victorian style residence with an

This preview shows page 20 - 21 out of 21 pages.

89. Margo Manor has a Victorian style residence with an adjusted basis of $200,000 and a fair market value of $150,000. Because of the unique styling of the home, she decided to convert it to rental property. One year later, after taking depreciation of $15,000, she is considering selling the property. Determine the results if she sells the property for: (a.) $130,000 (b.) $165,000 (c.) $220,000 Correct Answer:Loss = $5,000$130,000Sale price- 135,000($150,000 basis for loss - $15,000 depreciation)($5,000)Loss$220,000Sale price- 185,000($200,000 basis for gain - $15,000 depreciation)$ 35,000 Gain90. In November 2013, Bill Barley sells property with an adjusted basis of $50,000 for $200,000. The buyer pays Bill $40,000 cash at the time of sale transaction with the remaining $160,000 to be paid in five annual installments of $32,000 beginning in November 2014 with interest at 10 percent. (a.) What is the amount of income to be reported by Bill in 2013? (b.) What is the amount of income to be reported in later years?
Background image
91. In 2013, Tina Turnips gave property with an adjusted basis of $63,000 to Sally when the fair market value was $163,000. Gift taxes paid on the property were $30,000, and the taxable gift was $150,000. (a.) What is the adjusted basis of the property to Sally? (b.) What is the adjusted basis of the property to Sally if adjusted basis of the property to Tina was $180,000 instead of $64,000? (c.) What is the answer to (a) if the gift had been made in 1975? Correct Answer:$100,000Basis increase =x $30,000 = $20,000$150,000
Background image

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture