tax 13.hw

8/18/2019 TAX 13.hw

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8/18/2019 TAX 13.hw


8/18/2019 TAX 13.hw


13-32

Sec 1231 Sec 1245 Sec 1250Land on which factory is located yesEquipment yes yes

Inentory!atent yes yesLand held primarily for sale"actory #uildin$ yes yes

13-33a% &54'000 (&40'000 ) &14'000 * #% &2+'000 (&40'000 - & 12'000*c% &3,'300 (&40'000 ) & '300 .L/ - &'000*d% &30'000 (&40'000 - & 3'000 L/L - &,'000

13-34a% &450 (&3'000 15* #% ecrease &2'10 (&5'10 - &3'000*%c% &00% /he net Sec% 1231 $ain of &3'000 is taed at 20' #ecause her mar$inal tarate is 3%%

13-35a% Sec% 1231 #ecause does not apply to personal use assets #% Sec% 1231 $ainc% Sec% 1231 lossd% 6ll of the &4'000 $ain is Sec% 1245 ordinary income

13-3a% &,'000 (&,0'000 - &3'000* #% &5+'000 (&,0'000 - &12'000

13-3,a% &+0'000% % #% 0 #ecause the capital loss carry forward may #e used only to offset capital $ainincome%

13-32010 &2'000 .L/

2011 0 - &4'000 ordinary loss2012 0 - &,'000 ordinary loss2013 0 - /he &5'000 net Sec% 1231 $ain is ordinary income since there is &11'000 ofno recaptured%2014 &5'+00 .L/ and &'000 of ordinary income2015 0 - &,'000 ordinary loss

13-40

8/18/2019 TAX 13.hw


&15'150 (&13'200 ) &1'50*% &40'000 of the $ain from the sale is ordinary income dueto the fie-year loo7 #ac7 rule8 thus &40'000 is taed at 33% /he remainin$ $ain of &13'000 istaed at 15

13-41ase ain9Loss :rdinary Sec 1231

a &10,'000 &10,'000 # 452'000 350'000 102'000c (55'000* (55'000*

13-42a% &230'000% /he maimum sellin$ price that Eli;a#eth could sell the equipment forwithout hain$ to reco$ni;e Sec% 1245 ordinary income is &230'000' the ad<usted #asis% #% &21'000% the sellin$ price is &21'000

13-43a% epreciation of &403 (&4'200 0%120 0%5* is allowed in 2015% /he 50results from the half-year conention

#% portion of truc7 personal useamount reali;ed &2'100 &00less ad<usted #asis (113* (1+00*

reali;ed $ain & 4+, (&00*

13-44a% =eali;ed $ain is &2+'000 (&,2'000 - &44'000*% #% =eco$ni;ed $ain is &2+'000c% &2'000 of the $ain is Sec% 1245 ordinary income%d% &2'000 of the $ain is Sec% 1231%e% >asis of the mar7eta#le securities is &30'000f% >asis of equipment receied is &42'000 (&44'000 - &30'000 ) &2+'000*%

13-45a% &'000% (&40'000 - &34'000*% #% 0 #ecause the echan$e is a li7e-7ind echan$e%c% &34'000%d% &20'000% (&41'000 - &21'000*e% /he $ain is &31'000% (&52'000 - &21'000*% &2'000

13-4

a% &5+'000 (&110'000 - &52'000* #% &5+'000 Sec% 1245 does not affect the amount of $ain% and Sec% 1245 affects thecharacter of the $ain%c% &11'00 (&20'300 - &+',00* (%35 times the Sec% 1245 ordinary income of&5+'000* ? 15 times the L/*

13-4,a% &10'000 (&,20'000 - &110'000* #% &130'000 (&0'000 - &50'000*

8/18/2019 TAX 13.hw


13-4a% &3'0 increase% &12'000 (&40'000 - &2+'000* #% &4'50 increase% &1'000 (&+0'000 - &1'000*c% &'550 increase% &10'000 of the Sec% 1231 $ain of &23'000 (&13'000 - &140'000*d% &4'20 decrease (&13'000 33* % Sec% 1231 loss of &13'000 (&12,'000 -

&140'000*%

13-50a% &14'20 (14%2 &100'000* of depreciation plus &250'000 epensed #% &12'245 (24%4 &100'000 192*c% &,'535 Sec% 1245 ordinary income% (&150'000 - &,3'45*

13-52a% #uildin$ landamount reali;e &112'500 &12'500less ad<usted #asis (0 * (10'000*reali;ed $ain &112'500 &2'500

#% @esse must reco$ni;e &0'000 of Sec% 1245 ordinary income and &22'500 of Sec% 1231$ain due to the sale of the #uildin$% /he &2'500 $ain on the sale of land is Sec% 1231 $ain

13-53

a% &22,'000% /he maimum sellin$ price that =osemary could sell the #uildin$ forwithout hain$ to reco$ni;e Sec% 1250 ordinary income is &22,'000'% #% &2,+'000% /he first &,3'000 of $ain resultin$ from the sale of the #uildin$ would #e Sec% 1250ordinary income%

13-5a%#uildin$ 4'050'000

ori$inal cost2',00'000 accum% depr 1'000'000 1',00'000

$ain 2'350'000

#% land sp 450000 6> 300'000$ain 150'000

c% &1'000'000% 6ll of the $ain to the etent of depreciation ta7en%d% =educe $ain taed at 25' capital losses reduce $ains at the hi$hest ta rates first%

8/18/2019 TAX 13.hw


tax 13.hw

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