Mr and ms smiths partnership owns the following

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Intermediate Accounting: Reporting and Analysis
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Chapter 18 / Exercise 18-19
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
Expert Verified
90. Mr. and Ms. Smith’s partnership owns the following assets: Adjusted Basis Fair Market Value Accounts receivable $ –0– $ 60,000 Inventory 20,000 30,000 Machinery and equipment* 50,000 90,000 Buildings** 120,000 170,000 Land 80,000 140,000 $270,000 $490,000
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Intermediate Accounting: Reporting and Analysis
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Chapter 18 / Exercise 18-19
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
Expert Verified
* Potential § 1245 recapture of $45,000. ** Straight-line depreciation was used. Mr. and Ms. Smith each have a basis for their partnership interest of $135,000. Calculate their combined recognized gain or loss and classify it as capital or ordinary if they sell their partnership interests for $500,000.
91. Kristine owns all of the stock of a C corporation which owns the following assets: Adjusted Basis Fair Market Value Accounts receivable $ –0– $ 60,000 Inventory 20,000 30,000 Machinery and equipment* 50,000 90,000 Buildings** 120,000 170,000 Land 80,000 140,000 $270,000 $490,000 * Potential § 1245 recapture of $45,000. ** Straight-line depreciation was used. Her adjusted basis for her stock is $270,000. Calculate Kristine’s recognized gain or loss and classify it as capital or ordinary if she sells her stock for $500,000.
92. Devon owns 40% of the Agate Company for which his basis is $100,000. He sells one-half of his ownership interest to Bernice for $80,000. Which of the following statements is correct?
93. Which of the following statements is correct? A. The sale of an unincorporated sole proprietorship is always treated as the sale of the individual business assets. B. The sale of a partnership is treated as the sale of the individual assets only if the sales transaction is structured as the sale of the individual assets. C. The sale of a corporation is either treated as the sale of the corporate stock or as the sale of the individual assets. D. Only a. and b. are correct. E. a., b., and c. are correct.
94. Which of the following statements is incorrect?

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