Question

Hauswirth Corporation sold (or exchanged) a warehouse in year O. Hauswirth bought the warehouse several years ago for $113,500 and it has claimed $33,800 of depreciation expense against the building. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Round your final answers to the nearest whole dollar amount.) Required uswirth receives $88,500 in cash for the warehouse, compute the amount and character of Hauswirth's a. Assuming that Ha recognized gain or loss on the sale compute Hauswirth's gain realized, gain recognized, deferred gain, and basis in the new land amount and character of Hauswirth's gain in year 0 and in year 1. (Round "Gross Profit Percentage" to 2 decimal places,) b. Assuming that Haus swirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $88,500, c. Assuming that Hauswirth receives $37,500 in cash in year O and a $83,500 note receivable that is payable in year 1, compute the O Answer is not complete. Complete this question by entering your answers in the tabs below Req c Req a Req b auswirth receives $88,500 in cash for the warehouse, compute the amount and character of Hauswirths recognized gain or loss on the sale. 8,800 of Recognized Gain/(Loss) 8,800

Answer 1

Requirement-a Requirement-c hauswirth recognized an 8800 gain. The entire gain is ordinary income under then the year 0 haurswith recognized 33800 of ordinary income and 2324.4 of 1245 depreciation recapture rule,computed as below: 1231 gain.in year 1 ,its recognized 5175.6 of 1231 gain,computed as below Description (1) amount realized (2) original basis (3) accumulated depreciation (4) adjusted basis (5) gain(loss)recognized Amount Explanation S.No. Description Amount Explanation 121,000 given 113,500 given (33,800) given 79,700 (2)+(3) 41,300 (1)-(4) S.No. (1) amount realized (2) original basis (3) accumulated depreciation (4) adjusted basis (5) realized gain (loss) 88,500 given 113,500 given (33,800) given 79,700 (2)+(3) 8,800 ((4) ordinary income 1245 depreciation ordinary income (1245 depreciation recapture(not eligible for installment (6) reporting) 7) gain eligible for installment reporting (8) gross profit percentage (9) payment received in year 0 ordinary income (6) recapture) lesser of (3)or (5) 33,800 lesser of (3)or (5) 7,500 8,800 (5)-(6) 1231 gain Requirement-b 37500 given in this case this transaction qualifies as a 1031 like kind exchange,hauswirth will not recognized any of its 8800 realized gain(its deferred gain is 8800) haurswith basis in its new equipment is 79700 see the calculation below: 1231 gain recognized in year 0 2324.4 (9) (8)1231 gain 83500 given 5175.6 (10(8)1231 gain (10) payment received in year 1 S.No. Description Amount xplanation 88,500 given -given 88,500 (1)H2) 1231 gain recognized in year 0 (1) amount realized from equipment (2) amount realized from boot cash (3) Total amount realized (4) adjusted basis (5) gain realized (6) gain recognized (7) deferred gain 79,700 113500-33800 8,800 (3)-(4) lesser of (2)or (5) 8,800 (5)-(6) 79,700 (1)-(7) adjusted basis in new property