Homework Answers
4. No joe cant realize income at the end of the year. Capital gain on any asset should be recognized only at the time of sale.
5.Joe at the time of sale should recognize capital gain.The of such gain is $5000.
6. Even though the land is on mortgage and buyer assumes Joe's mortgage,Joe should recognize an amount of $5000 as capital gain.
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4. Assume Joe's basis in the land is $10,000. At the end of the year the...
1. Joe buys a piece of land on January 3rd of the current year. He pays$10,000...
1. Joe buys a piece of land on January 3rd of the current year. He pays$10,000 in cash. What is Joe’s basis in the land? 2. Suppose Joe gives the seller $7,000 in cash and a note for $3,000 paying interest at the current rate of 3%. What is Joe’s basis in the land? 3. Suppose instead that Joe gives the seller $6,000 in cash, a note with interest, promising to pay $3,000 in one year, and a piece of...
1 Assume instead of the above that Aliza purchases a house for $500,000. She pays $200,000...
1 Assume instead of the above that Aliza purchases a house for $500,000. She pays $200,000 in cash and signs a mortgage for $300,000. After living in the house as her principle residence for 2 years, she sells the house for $900,000 in cash add the buyer assumes her mortgage of$200,000. What is a Alizsa’s amount realized on the sale? 2. Does Aliza realize a gain on the sale of her residence, and if so, what is the amount? 3....
1. Joe buys a piece of land on January 3rd of the current year. He pays...
1. Joe buys a piece of land on January 3rd of the current year. He pays $10,000 in cash. What is Joe's basis in the land? 2. Suppose Joe gives the seller $7,000 in cash and a note for $3,000 paying interest at the current rate of 3%. What is Joe's basis in the land? 3. Suppose instead that Joe gives the seller $6,000 in cash, a note with interest, promising to pay $3,000 in one year, and a piece...
8. Assume instead of the above that Aliza purchases a house for $500,000. She pays $200,000...
8. Assume instead of the above that Aliza purchases a house for $500,000. She pays $200,000 in cash and signs a mortgage for $300,000. After living in the house as her principle residence for 2 years, she sells the house for $900,000 in cash add the buyer assumes her mortgage of$200,000. What is a Alizsa's amount realized on the sale? 9. Does Aliza realize a gain on the sale of her residence, and if so, what is the amount? 10....
11. Isaac buys a piece of land as an investment, paying $20,000. Three years later he...
11. Isaac buys a piece of land as an investment, paying $20,000. Three years later he trades the land to Isadore for a piece of land worth $26,000. Isaac holds the new land as an investment. Does Isaac realize a gain on the swap of the lland, and if so how much gain is realized? 12. Does Isaac recognize a gain on the swap of the land and if so how much is it? 13. What is Isaac's adjusted basis...
15. Ursula owns land with an adjusted basis of $400,000, subject to a mortgage liability of...
15. Ursula owns land with an adjusted basis of $400,000, subject to a mortgage liability of $170,000. During the current year, Ursula sells her land. The buyer gives Ursula $250,000 in cash, a note for $270,000, property with a fair market value of $80,000, and agrees to assume the mortgage liability. Pertaining to the sale, Ursula pays realtor, legal, and administrative fees totaling $20,000. How much is Ursula's consideration received? a) $750,000 b) $580,000. c) $790,000 d) $770,000 e) $600,000
Annette owns land worth $75 (adjusted basis of $1). She transfers it to Landcorp for voting...
Annette owns land worth $75 (adjusted basis of $1). She transfers it to Landcorp for voting common stock worth $75. At the same time Helmut agrees to provide legal services for Landcorp in exchange for stock worth $25. There is no other stock in Landcorp. a) Does Annette recognize gain on the transfer and if yes, how much? b) What is Landcorp’s basis in the land? c) Does the answer change (and if so how and why)...
Partnership
On January 1, Bruce, Melissa, Eric, and Finn formed a partnership. The contributions of the individuals are listed below. Bruce receives a 20% partnership interest, Melissa receives a 50% partnership interest, Eric receives a 20% partnership interest, and Finn receives a 10% interest. They share the economic risk of loss from recourse liabilities according to their partnership interests.PartnerProperty ContributedBasis to PartnerBruceAccounts Receivable$0MelissaLand$28,000Building$47,000EricServices?FinnMachinery$60,000Melissa has claimed $12,000 of straight-line MACRS depreciation on the building. The land and building are subject to a...
Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which...
Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land. If an amount is zero, enter "0". a. What are the tax consequences to Allie and to Broadbill Corporation? Since...
Partner A has a basis of $25,000 in a partnership interest at a time when the...
Partner A has a basis of $25,000 in a partnership interest at a time when the partnership distributes the following items to A in the form of a non-liquidating distribution: $10,000 in cash, $12,000 in accounts receivable in which the partnership has a basis of $6,000, inventory worth $26,000 in which the partnership has a basis of $14,000, and a capital asset worth $10,000 in which the partnership has a basis of $5,000. There is no unrealized depreciation with respect...
1. Joe buys a piece of land on January 3rd of the current year. He pays $10,000 in cash. What is Joe's basis in the land? 2. Suppose Joe gives the seller $7,000 in cash and a note for $3,000 paying interest at the current rate of 3%. What is Joe's basis in the land? 3. Suppose instead that Joe gives the seller $6,000 in cash, a note with interest, promising to pay $3,000 in one year, and a piece...
8. Assume instead of the above that Aliza purchases a house for $500,000. She pays $200,000 in cash and signs a mortgage for $300,000. After living in the house as her principle residence for 2 years, she sells the house for $900,000 in cash add the buyer assumes her mortgage of$200,000. What is a Alizsa's amount realized on the sale? 9. Does Aliza realize a gain on the sale of her residence, and if so, what is the amount? 10....
11. Isaac buys a piece of land as an investment, paying $20,000. Three years later he trades the land to Isadore for a piece of land worth $26,000. Isaac holds the new land as an investment. Does Isaac realize a gain on the swap of the lland, and if so how much gain is realized? 12. Does Isaac recognize a gain on the swap of the land and if so how much is it? 13. What is Isaac's adjusted basis...
15. Ursula owns land with an adjusted basis of $400,000, subject to a mortgage liability of $170,000. During the current year, Ursula sells her land. The buyer gives Ursula $250,000 in cash, a note for $270,000, property with a fair market value of $80,000, and agrees to assume the mortgage liability. Pertaining to the sale, Ursula pays realtor, legal, and administrative fees totaling $20,000. How much is Ursula's consideration received? a) $750,000 b) $580,000. c) $790,000 d) $770,000 e) $600,000
Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land. If an amount is zero, enter "0". a. What are the tax consequences to Allie and to Broadbill Corporation? Since...
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