Pam and Joe each own 50% of Tucson LLC a limited liability company located in Tucson, AZ which was created in April of 2019. Tucson LLC provides veterinary services and uses the cash method of accounting. Pam and Joe have come to you on December 30, 2019 to ask your advice on some transactions they are considering.
Tucson's financial information is provided below:
Profit and Loss Statement January 1, 2019-December 30, 2019:
Gross Receipts: | |
Veterinary Services | $675,000 |
Expenses: | |
Salaries | $400,000 |
Utilities | $17,000 |
Depreciation | $15,000 |
Supplies | $75,000 |
Interest | $20,000 |
Total Expenses | $557,000 |
Net Income | $148,000 |
Balance Sheet – 12/30/2019
Assets: | |
Cash | $ 8,500 |
Equipment | $50,000 |
A/D – Equipment | (21,500) |
Building | $250,000 |
A/D – Building | (100,000) |
Total Assets | $187,000 |
Liabilities & Equity: | |
Mortgage – Building | $25,000 |
Member Capital – Avery | $81,000 |
Member Capital – Henry | $81,000 |
Total Liabilities & Equity | $187,000 |
Please provide Tucson LLC advice on the following transaction:
Asset | Cost | |
Examination Table | $15,000 | |
X-Ray Machine | $250,000 |
(a). Calculate the tax depreciation assuming these assets are purchased and placed in service on 12/31/2019 assuming that they have elected not to take Section 179 expense and bonus depreciation on these assets. (b). Calculate tax depreciation assuming these assets are purchased on 12/31/2019 assuming that they have not made any elections out of 179 or bonus depreciation. In each calculation assume Tucson LLC would like to take the maximum allowable deduction.
FMV $400,000
Cost $200,000
A/D-Tax ($125,000)
Determine whether it is better from a tax perspective for Tucson LLC to enter into a like kind exchange with Fred or if they should buy the building from Chris and sell their building to the buyer their real estate agent identified.
When making your determination consider both the gain on sale of the Tucson LLC's building (if any) as well as the tax depreciation expense allowable on the new building acquired by Tucson LLC. You must show your calculations for each scenario as support for your conclusion.
Date Acquired | Description | Cost | Tax A/D |
4/1/2019 | Furniture & Fixtures | $15,000 | $8,000 |
4/1/2019 | Veterinary Equipment | $31,000 | $12,500 |
4/1/2019 | Copier | $4,000 | $1,000 |
Tucson LLC plans to sell all of these assets on 12/31/2019, the proceeds are as follows:
Furniture & Fixtures | $10,000 |
Veterinary Equipment | $35,000 |
Copier | $2,000 |
Calculate the amount and character of the gain or loss on the sale of these assets.
Pam and Joe each own 50% of Tucson LLC a limited liability company located in Tucson,...
In each of the problems below please describe the tax consequences to the parties involved in the transaction. The answer should include an analysis of whether Section 351 applies to the transaction (unless the problem already states that Section 351 applies) and the computations for any recognized gain, the tax basis of any stock received by the shareholders; the tax basis of any property received by the corporation and the holding period of the stock/property. 1. On January 1, 2019...
Carrie D’Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf club manufacturing business together. On January 2, 2019, D’Lake, Green, and Divot form the Slicenhook Partnership, a general partnership. Slicenhook’s main product will be a perimeter-weighted titanium driver with a patented graphite shaft. All three partners plan to actively participate in the business. The partners contribute the following property to form Slicenhook: Partner Contribution Carrie D’Lake Land, FMV $...
Complete Anytime Plumbing, LLC’s 2019 partnership tax return (Form 1065 and one Schedule K-1, as they are the same) based upon the facts presented. Ignore all AMT calculations and AMT related reporting items.If any information is missing, use reasonable assumptions to fill in the gaps.Schedule k1.pdf2019 Form 1065.pdfCompany InformationFrankie Jones and Wayne Brown decided to form a plumbing company, available 24 hours a day, seven days a week, called Anytime Plumbing, LLC (AP). AP finds itself often as one of the only available...
Mr. Bike is the long time proprietor of an unincorporated business he calls “Get with Bike” that sells and repairs bicycles. Since his children have moved out, his spouse has been a little cranky and feels she needs to change gears. She would like to be more involved in the business and feels that she can do a better job to inflate the profits of the business, starting with the next business cycle.Mr. Bike, being older than his spouse, has...
BAYOU COMPUTER SERVICES, INC. Company Background Bayou Computer Services, Inc, is a popular computer service center that was started by Begona Perez-Mira and Brenda Henson. As individuals who devoted a great deal of their time assisting others with solving computer problems, they wanted a way to provide their services to other people in the local area. They established a computer service business that specialines in computer repairs, networking, vinus and spy ware protection, removing viruses from computers in order to...
Instructions for using the SAP ERP system start on page 13 of this document. Account Balances as of December 31, 2018 Debit Balance Credit Balance 100000 Bank Account $277,518 110100 Accounts Receivable (Direct Posting Account) 92,670 110150 Allowance for Bad Debts 2,500 200600 Inventory-Operating Supplies 8,832 200900 Inventory-Raw Materials (Direct Post) 52,000 200910 Inventory-Finished Goods (Direct Post) 281,298 200920 Inventory-Trading Goods (Direct Post) 66,474 210000 Prepaid Insurance 5,000 212000 Prepaid Advertising 1,100 220110 Land (Direct Post) 425,000 220210 Production Machinery,...
this is all the information given Personal Financial Planning Mini-Case Jeff and Mary Douglas, a couple in their mid-30s, have two children - Paul age 6 and Marcy age 7. The Douglas' do not have substantial assets and have not yet reached their peak earning years. Jeff is a general manager of a jewelry manufacturer in Providence, RI while Mary teaches at the local elementary school in the town of Tiverton, RI. The family needs both incomes to meet their...