A taxpayer is trading in an automobile used solely for business purposes for another automobile to...
A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is worth $22,000. The taxpayer is also assuming a liability secured by the new auto of $2,000.
What is the gain or loss realized, recognized, and basis in the new asset?
Homework Answers
| Answer is as under |
| Calculation of Gain/Loss Realized: |
| Amount realized = (Fair market value of auto - additional liability) − Adjusted basis of auto given up |
| (22000-2000)-(35000-18000) |
| 3000 |
| $3,000 gain |
| Calculation of Basis of New assets |
| New basis = Adjusted basis of property given up + additional liability |
| 19000 |
| $19000 |
Add Answer to:
A taxpayer is trading in an automobile used solely for business
purposes for another automobile to...
1. 2. 3. For tax planning purposes, Arnold would like to report all of the income...
1.
2.
3.
For tax planning purposes, Arnold would like to report all of the income from the sale of his computers in the current tax year, rather than use the installment sale method. However, Arnold heard that use of the installment method is required when at least one (1) payment is to be received after the close of the tax year in which the sale occurs. What code section and subsection would allow Arnold to elect out of the...
Jay owns 80% of Crystal Corporation stock. He transfers a business automobile to Crystal in exchange...
Jay owns 80% of Crystal Corporation stock. He transfers a business automobile to Crystal in exchange for additional Crystal stock worth $12,000 and Crystal's assumption of both his $2,500 automobile debt and his $5,500 education loan. The automobile originally cost Jay $22,000 and, on the transfer date, has a $10,500 adjusted basis and a $20,000 FMV. Read the requirements. Requirement a. What are the amount and character of Jay's recognized gain or loss? Jay realizes a C D and recognizes...
Taxpayer T owns an office building worth $950,000, encumbered by a mortgage of $710,000. His original cost was $830,000,...
Taxpayer T owns an office building worth $950,000, encumbered by a mortgage of $710,000. His original cost was $830,000, and he has taken depreciation deductions of $185,000 on the building. T wants to exchange his building for another office building worth $800,000. He will assume the existing mortgage of $580,000 on the new building. 1) As state, would this be a fair arms-length exchange? If not, who should be required to pay cash boot, and how much? Explain. 2) Assume...
Jordan owns 80% of Ruby Corporation stock. He transfers a business automobile to Ruby in exchange...
Jordan owns 80% of Ruby Corporation stock. He transfers a business automobile to Ruby in exchange for additional Ruby stock worth $12,000 and Ruby's assumption of both his $3,500 automobile debt and his $1,500 education loan. The automobile originally cost Jordan $22,000 and, on the transfer date, has a $7,500 adjusted basis and a $17,000 FMV Read the requirements. Requirement a. What are the amount and character of Jordan's recognized gain or loss? Jordan realizes a D and recognizes a...
Use the following information to answer the next 3 questions: 1-Desert, Co. is trading a machine...
Use the following information to answer the next 3 questions: 1-Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset. For each of the following independent scenarios, determine the amount to be capitalized for the new fixed asset that Desert is acquiring (i.e. the original cost Desert will report on their balance sheet for the new asset) and the gain or loss to be recognized at the time...
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the...
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the land for $38,000. the new land had a fair market value of $40,000. Arlington also received $12,000 of office equipment in the transaction. what is Arlington gain or loss recognized on the exchange? $0 $12,000 $2,000 14,000 none of the choices are correct
On March 17, a calendar-year taxpayer sells a machine used in its business for $9,000. The...
On March 17, a calendar-year taxpayer sells a machine used in its business for $9,000. The machine was purchased sixteen months earlier for $8,500 and depreciation deductions of $1,800 have been taken. What is the amount and type of gain recognized on the sale? a. $2,300 Section 1231 gain b. $2,300 ordinary income c. $1,800 Section 1245 recapture; $500 Section 1231 gain d. $1,800 Section 1250 recapture; $500 Section 1231 gain e. None of the above Please give an explanation...
A taxpayer purchased used business equipment on November 20, 2016, for $100,000. The equipment was sold...
A taxpayer purchased used business equipment on November 20, 2016, for $100,000. The equipment was sold for $60,000 on August 25, 2018. Depreciation information is as follows: Accelerated depreciation taken $47,500 Straight-line depreciation (7-year life) would have been 28,500 How will the gain or loss on the sale of this equipment be treated for tax purposes? Question 18 options: 1) $7,500 ordinary income 2) $7,500 long-term capital gain 3) $7,500 short-term capital gain 4) $7,500 Section 1231 gain 5) None...
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the...
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the land for $35,500. The new land had a fair market value of $38,750. Arlington also received $9,500 of office equipment in the transaction. What is Arlington's gain or loss recognized on the exchange? Multiple Choice $3,250 SO. $12,750. None of the choices are correct. $9,500.
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the...
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the land it exchanged for $36,000. The new land had a fair market value of $39,000. Arlington also received $10,000 of office equipment in the transaction. What is Arlington's recognized gain or loss on the exchange? Multiple Choice $3,000. None of the choices are correct. $13,000. $0. $10,000.
1.
2.
3.
For tax planning purposes, Arnold would like to report all of the income from the sale of his computers in the current tax year, rather than use the installment sale method. However, Arnold heard that use of the installment method is required when at least one (1) payment is to be received after the close of the tax year in which the sale occurs. What code section and subsection would allow Arnold to elect out of the...
Jay owns 80% of Crystal Corporation stock. He transfers a business automobile to Crystal in exchange for additional Crystal stock worth $12,000 and Crystal's assumption of both his $2,500 automobile debt and his $5,500 education loan. The automobile originally cost Jay $22,000 and, on the transfer date, has a $10,500 adjusted basis and a $20,000 FMV. Read the requirements. Requirement a. What are the amount and character of Jay's recognized gain or loss? Jay realizes a C D and recognizes...
Jordan owns 80% of Ruby Corporation stock. He transfers a business automobile to Ruby in exchange for additional Ruby stock worth $12,000 and Ruby's assumption of both his $3,500 automobile debt and his $1,500 education loan. The automobile originally cost Jordan $22,000 and, on the transfer date, has a $7,500 adjusted basis and a $17,000 FMV Read the requirements. Requirement a. What are the amount and character of Jordan's recognized gain or loss? Jordan realizes a D and recognizes a...
Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the land for $35,500. The new land had a fair market value of $38,750. Arlington also received $9,500 of office equipment in the transaction. What is Arlington's gain or loss recognized on the exchange? Multiple Choice $3,250 SO. $12,750. None of the choices are correct. $9,500.
Most questions answered within 3 hours.
-
Cranium, Inc., purchases term papers from an overseas supplier
under a continuous review system. The average...
asked 31 minutes ago -
1- What is the freezing point of pure water (in degrees
Celsius)?
2-
he molar mass...
asked 1 hour ago -
Determine the direction of the force that will act on the charge
in each of the...
asked 1 hour ago -
You purchase your daily coffee at the Chemist’s Coffeehouse and
have a choice of two cups:...
asked 4 hours ago -
Which of the following pairs of chemicals could be used to make
a buffer solution?
A.)...
asked 3 hours ago -
Problem 16-51 Sales
Activity Variance (LO 16-3)Odessa, Inc., reports the following
information concerning operations for the...
asked 4 hours ago -
Pictured on the right are thee point charges Q1 = 18.4 μC, Q2 =
-30.6 μC,...
asked 4 hours ago -
A graduate student is conducting research in psychology and
needs to obtain the IQ scores of...
asked 5 hours ago -
R2.84: There are 2 defective products in a production lot of 10.
An inspector randomly selected...
asked 6 hours ago -
Consider the following equilibrium system: COCl2(g) CO(g) +
Cl2(g) A 10.00 L evacuated flask is filled...
asked 6 hours ago -
1) What are the two distinct steps that one needs to perform
when developing a data...
asked 7 hours ago -
2) Write a C++ program that uses a class called “Degree” to
obtain the trigonometric
values...
asked 8 hours ago