Question

Monster Corp. sold the following property on January 1 of the current year:

                                                Secs                 Equip              Bldg                Land

Selling Price                           $65,000           $210,000         $385,000         $175,000

Cost                                        100,000           200,000         400,000          190,000
Acc Depr                                     -0-               (125,000)        (120,000)              -0-

AB                                          100,000               75,000         280,000          190,000

G/L                                         (35,000)           135,000          105,000           (15,000)

The corporation used the equipment, building, and land in its business and has held all the property for more than one year. In addition, Monster Corp. had $800,000 of operating net income during the current year and has a $24,000 nonrecaptured Section 1231 loss from prior years. Determine the character of the gains and losses and calculate the corporation’s taxable income.

Answer 1

		Secs	Equip	Bldg	Land	Net Gain From Selling the Assets
A	Selling Cost	$65,000	$210,000	$385,000	$175,000
B	Cost	$100,000	$200,000	$400,000	$190,000
C	Acc Depriciation	0	$125,000	$120,000	0
D	Adjusted Basis (NBV) (B-C)	$100,000	$75,000	$280,000	$190,000
E	Gain / Loss (A-B)	($35,000)	$135,000	$105,000	($15,000)	$190,000
		Loss	Profit	Profit	Loss	Net Gain
	Gain from Selling The Assets	$190,000
	Operating Profit	$800,000
	Less Deduction of $24000 nonrecaptured loss Yearly Limit 3000 as per Section 1231	($3,000)
	Corporation Taxable Income:-	$987,000