Hank owns a gym called Ultimate Fitness. During the past year, Hank sold his facility to purchase a larger building with a parking lot. He received sales proceeds of $125,000 form the buyer. He paid a sales commission to his broker of $6,500. The building had an original cost of $105,00 and had accumulated depreciation for tax purposes of $15,825. What is Hank's realized gain or loss on the sale?

Hank owns a gym called Ultimate Fitness. During the past year, Hank sold his facility to purchase a larger building with a parking lot. He received sales proceeds of $125,000 form the buyer. He paid a sales commission to his broker of $6,500. The building had an original cost of $105,00 and had accumulated depreciation for tax purposes of $15,825. What is Hank's realized gain or loss on the sale?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 52P

See similar textbooks

Similar questions

Nicky receives a car from Sam as a gift. Sam paid 48,000 for the car. He had used it for business purposes and had deducted 10,000 for depreciation up to the time he gave the car to Nicky. The fair market value of the car is 33,000. a. Assuming that Nicky uses the car for business purposes, what is her basis for depreciation? b. Assume that Nicky deducts depreciation of 6,500 and then sells the car for 32,500. What is her recognized gain or loss? c. Assume that Nicky deducts depreciation of 6,500 and then sells the car for 20,000. What is her recognized gain or loss?
David decided to give Blake a machine for use in Blake’s business. David originally paid $38,000 for the machine. David took $9,500 in depreciation on the machine before giving it to Blake. The FMV at the time of the gift was $40,000. Blake paid $250 to ship the machine to his location. What is Blake’s depreciable basis for the machine?
Andrew purchased a residential rental property for $245,000. He made a down payment of $20,000 and secured a nonrecourse loan for $225,000. Andrew defaulted on the loan when the balance of the note was $210,000 and his adjusted basis in the property after depreciation claimed was $223,000. Fair market value of the property at the time of foreclosure was $205,000. What is Andrew's realized amount from the foreclosure? $205,000 $210,000 $223,000 $225,000
Chuck sold a tractor to a dealer for $16,000. He bought the tractor for $25,500 several years ago and has claimed $12,000 of depreciation deduction on the tractor. What is the amount and character of his gain or loss from the sale of the tractor?
Leonard London sold a building used in his business to Michelle Martinson. He had purchased the property several years previously for $340,000, $300,000 of which was the mortgage. Major improvements in the amount of $240,000 had been made. At the time of the sale, Leonard had taken $220,000 in straight-line depreciation. Leonard paid $104,000 in selling expenses. Michelle gave Leonard $400,000 in cash and unlike property with a fair market value of $240,000, assumed a delinquent real estate bill of $105,000 and assumed Leonard's mortgage on the property in the amount of $234,000. What is Leonard's gain on the sale? $191,000 $385,000 $410,000 $503,000 $515,000
Ken sold a rental property for $682,000. He received $186,000 in the current year and $124,000 each year for the next four years. Of the sales price, $502,500 was allocated to the building, and the remaining $179,500 was allocated to the land. Ken purchased the property several years ago for $576,500. When he initially purchased the property, he allocated $457,500 of the purchase price to the building and $119,000 to the land. Ken has claimed $30,900 of depreciation deductions over the years against the building. Ken had no other sales of §1231 or capital assets in the current year. Required: For the year of the sale, determine Ken's recognized gain or loss. For the year of the sale, determine character of Ken's gain, and calculate Ken's tax due because of the sale (assuming his marginal ordinary tax rate is 32 percent).
Franco converted a building from personal to business use in May 2018 when the fair market value was $27,500. He purchased the building in July 2015 for $44,000. On December 15 of this year, Franco sells the building for $22,000. On the date of sale, the accumulated depreciation on the building is $2,815. What is Franco's recognized gain or loss on the sale?
Max purchased a rental property ten years ago for a total of $300,000 with $70,000 attributed to the land. Over the years, he has claimed total CCA of $60,000 on the building. This year, he sold the property for $550,000 with $95,000 attributed to the land. Remember to take into account the recapture on the building, the capital gain on the building, and the capital gain on the land. What is the total increase in Max's taxable income as a result of this transaction? a) $60,000 b) $125,000 c) $185,000 d) $250,000 Minutes remaining: 114 Previous Question Next Question View Summary and Submit
Ken sold a rental property for $608,000. He received $140,000 in the current year and $117,000 each year for the next four years. Of the sales price, $422,500 was allocated to the building, and the remaining $185,500 was allocated to the land. Ken purchased the property several years ago for $479,500. When he initially purchased the property, he allocated $337,500 of the purchase price to the building and $142,000 to the land. Ken has claimed $23,500 of depreciation deductions over the years against the building. Ken had no other sales of §1231 or capital assets in the current year. Required: a. For the year of the sale, determine Ken's recognized gain or loss. b. For the year of the sale, determine character of Ken's gain, and calculate Ken's tax due because of the sale (assuming his marginal ordinary tax rate is 32 percent). Required A Required B For the year of the sale, determine Ken's recognized gain or loss. Note: Round your final answers to the nearest whole dollar amount. Input…
Given the situations below, which item still has the same basis as when it was purchased? Bob sold his rental property after claiming depreciation. Ebenezer's's father gifted him a car that cost him $25,000. The FMV on the date of the gift was $15,000. Ebenezer sold the car at a loss. Liz Marley acquired a rare stamp as a bequest when her father passed away. A coin is now worth double what Tim paid for it. a. Bob's rental property. b. Ebenezer's car. c. Liz's stamp. d. Tim's coin. For the "kiddie tax" rule to apply, the child must a. Have at least one living parent. b. Not have attained age 23 in the tax year.
Joaquin purchased a $235,000 crane for a construction business. The crane was sold for $175,000 after taking $115,000 of depreciation. Assume Joaquin is in the 35% tax rate bracket. Required: a. On what form would the gain or loss originally be reported? b. What is the amount of gain or loss on the sale? c. What amount of the gain or loss is subject to ordinary tax rates? Complete this question by entering your answers in the tabs below. Required a Required b Required c PS What is the amount of gain or loss on the sale?
Alpha sold machinery, which it used in its business to Beta, a related entity for $40,400. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $49,600 and had claimed $30,400 of depreciation expense. What is the amount and character of Alpha's gain?