25 the results of digimatic corporations first 3

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25. The results of Digimatic Corporation’s first 3 years of operations are presented below.Year Results of OperationsYear 1 Sec. 1231 losses of$10,000Year 2 Sec. 1231 losses of$15,000Year 3 Sec. 1231 gain of$75,000Digimatic Corporation’s Year 3 Sec. 1231 gain can best be characterized asA. net long-term capital A. gain of $75,000.B. A net long-term capital gain of $50,000.C. A net long-term capital gain of $50,000 and ordinary income of $25,000.D. A net long-term capital gain of $25,000 and ordinary income of $50,000.
26.On November 10 of year 1 Javier purchased a building, including the land it was on, to assemble his newequipment.The total cost of the purchase was $1,200,000; $300,000 was allocated to the basis of the land and theremaining $900,000 was allocated to the basis of the building. What would be the year 3 depreciation expense if thebuilding was sold on August 1 of year 3?
d.$20,454e.None of the above.27. Bolo Corporation exchanged a machine used in its business and $26,000 cash for an updated version of the samemachine. Its old machine had an adjusted basis of $27,000 and a fair market value of $32,000 at the date of theexchange. The new machine had a fair market value of $58,000. What is Bolo’s recognized gain on the exchangeand Bolo’s tax basis of the new machine?Bolo's RecognizedBolo's Tax Basis ofGainthe New Machine
28.Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $400,000in 2012.Ivory had production wages of $80,000. Ivory’s domestic production activities deduction is:
29.Tara purchased a computer (a 5 year property) for $40,000 to be used in her business. The cost recoveryallowed and allowable for the three years the computer was used is as follows:Cost Recovery AllowedCost Recovery AllowableYear 1$16,000$8,000Year 29,60012,800Year 35,7607,680If Tara sells the computer after three years for $15,000, how much gain should she recognize?a.$3,480.b.$6,360.c.$9,240.d.$11,480.e.None of the above.
30.Cora purchased a hotel building on May 17, 2012, for $7,000,000. Cost of land was estimated at $1,000,000.Determine the cost recovery deduction for 2013.
31. On October 1 of the current year, ABC Corp. entered into a like-kind exchange with XYZ Corp. ABC Corp.exchanged an apartment building, having an adjusted basis of $375,000 and subject to a mortgage of $100,000, forland with a fair market value of $550,000 and subject to a mortgage of $125,000. The property transfers were madesubject to the outstanding mortgages. What amount of gain should ABC recognize in his tax return for the year?

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Term
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Depreciation, Taxation in the United States, Generally Accepted Accounting Principles

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