During the current year, David sells a tract of land for $700,000. The property was received as a gift from Marva on March 10, 1995, when the property had a $340,000 fair market value (FMV). The taxable gift was $330,000 because the annual exclusion was $10,000 in 1995.Marva purchased the property on April 12, 1980, for $76,000. At the time of the gift, Marva paid a gift tax of $17,000. In order to sell the property, David paid a sales commission of $21,000.Read the requirements.Requirement a. What is David's realized gain on the sale?Select the formula, then calculate David's realized gain on the sale. (Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest dollar.)Minus:Realized gainRequirement b. How would your answer to Part a change, if at all, if the FMV of the gift property was $45,000 as of the date of the gift?The realized gain in this scenario is

A realised gain arises when an investment is sold for a higher price than it was purchased for…

Answered: During the current year, David sells a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Barbara sold land she purchased three months earlier for use in her business. Her cost and adjusted basis in the land prior to the sale were $80,000. She also incurred $10,000 in expenses related to the sale. The buyer paid $80,000 cash and assumed barbarous 20,000 mortgage on the property. What is the amount of Barbara's gain, and where on form 4797 will she report the sale?
Sally owns real property for which the annual property taxes are $12,930. She sells the property to Kate on April 2, 2020, for $646,500. Kate pays the real property taxes for the entire year on October 1, 2020. a. How much of the property taxes can be deducted by Sally and how much by Kate? b. What effect does the property tax apportionment have on Kate's adjusted basis in the property? c. What effect does the apportionment have on Sally's amount realized from the sale? d. How would the answers in parts (b) and (c) differ if Sally paid the taxes?
Nell, Nina, and Nora Potter, who are sisters, sell their principal residence (owned as tenants in common) in which they have lived for the past 25 years. The youngest of the sisters is age 60. The selling price is $960,000, selling expenses and legal fees are $63,000, and the adjusted basis is $120,000 (the fair market value of the residence when inherited from their parents 25 years ago; they made no capital improvements during the time they held the residence). The sisters plan to move into rental housing and not acquire another residence. Nell has contacted you on behalf of the Potters regarding the tax consequences of the sale.a. Write a letter to Nell advising her of the tax consequences and how taxes can be minimized. Nell’s address is 100 Oak Avenue, Billings, MT 59101.b. Prepare a memo discussing your approach to the situation for the tax files.
Bobby owned a building with a fair market value of $2,000,000. Bobby's adjusted basis in the building was $1,000,000. Bobby agreed to sell the building to his son, Robby for $1,300,000. What is the amount of Bobby's taxable gift? Assume the annual gift tax exclusion is $15,000. Bobby has made a taxable gift of $700,000 Bobby has made a taxable gift of $685,000 Bobby has made a taxable gift of $2,000,000 Bobby has not made a taxable gift
Jacinto sold a plot of land to Eva on July 31,2021 for $25000, and Jacinto basis in the property was 15000. Eva made one payment of $5000 during 2021 and agree to pay additional $5000 each year, plus interest for the next 4 years. Using the installment method what is Jacinto taxable gain for 2021
Mamie Hanson converts her principal residence into a rental property. This property had cost $850,000 several years ago. It is converted on January 1, 2019 and, at that time, it is estimated that the value of the property has increased to $ 1,100,000. At this time the value of the land is unchanged at $400,000. Provided her rental income before CCA is more than this amount, what is the maximum CCA that Mamie can claim for 2019? A. $48,000. B. $32,000. C. $44,000. D . $22,000
Randy established a trust, reserving in himself the power to terminate the trust if he is not satisfied with its operation. After two years, the power to terminate the trust expires. Randy transferred commercial real estate into the trust and specified that the income be payable annually for the benefit of his adult daughter, Michelle. Randy died one year after creation of the trust instrument. One estate tax implication for Randy of this trust is that the trust property is A) included in his estate because a family member is receiving a benefit from the trust. B) not included in his estate because a transfer for the benefit of a minor is exempt from tax. C) included in Randy's estate because he still had the power to terminate the trust at his death. D) not included in his estate because the power to terminate the trust eventually expires.
Juliana purchased land three years ago for $90,100. She made a gift of the land to Tom, her brother, in the current year, when the fair market value was $126,140. No Federal gift tax is paid on the transfer. Tom subsequently sells the property for $113,526. a. Tom's basis in the land is $ 90,100 V and he has a realized gain -v of $ 23,246 x on the sale. b. Assume, instead, that the land has a fair market value of $81,090 on the date of the gift, and that Tom sold the land for $77,036. Tom's basis in the land is $ 113,256 x and he has a realized loss V of 12,614 X on the sale.
Sally purchased a new computer (5-year property) on June 1, 2019, for $4,000. Sally could use the computer 100% of the time in her business, or she could allow her family to use the computer as well. Sally estimates that if her family uses the computer, the business use will be 45% and the personal use will be 55%.Determine the tax cost to Sally, in the year of acquisition, of allowing her family to use the computer. Assume that Sally would not elect § 179 immediate expensing and that her marginal tax rate is 32%. She does not claim any available additionalfirst-year depreciation.
Craig and Karen Conder purchased a new home on May 1 of year 1 for $200,000. At the time of the purchase, it was estimated that the real property tax rate for the year would be 1 percent of the property's value. How much in property taxes on the new home are the Conders allowed to deduct under each of the following circumstances? Assume the Conders' itemized deductions exceed the standard deduction before considering property taxes and the property tax is the only deductible tax they pay during the year. Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount. Required: The property tax estimate proves to be accurate. The seller and the Conders paid their share of the tax. The full property tax bill is paid to the taxing jurisdiction by the end of the year. The actual property tax bill was 1.05 percent of the property's value. The Conders paid their share of the estimated tax bill and the entire difference between the 1 percent estimate…
* Explain.
Voytek transfers land worth $200,000 with an adjusted basis of $17,000 to his wife Gosha for her birthday. The land was purchased 3 years ago. Assume no gift tax was paid on the transfer. a) Does Gosha have gross income as a result of the gift? Yes or No. No? b If the answer is no, Explain why. c)What is Gosha basis in the land? d)What is Gosha holding period in the land?

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