Given true answer general Accounting JK Properties, LLC sells a commercial property and a retail building withan adjusted tax basis of $200,000 and $400,000, respectively for$800,000. The original purchase price JK allocated to the building was$900,000. JK has deducted $500,000 in depreciation expense. JK'srealized gain is $200,000.If JK takes back a note as part of the proceeds, what is JK's gross profitpercentage?A) 45.00%B) 35.00%C) 25.00%D) 15.00%E) 30.00%

Detailed ExplanationStep-by-Step Solution to Determine JK's Gross Profit PercentageStep 1:…

Answered: JK Properties, LLC sells a commercial…

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 44P

See similar textbooks

Similar questions

Hurwitz, LLC sells a parcel of waterfront land and a residential condo building with an adjusted tax basis of $100,000 and 50,000, respectively for $500,000. The original purchase price Hurwitz, LLC allocated to the building was $600,000. Hurwitz LLC has deducted $550,000 in depreciation expense. Hurwitz, LLC's realized gain on this transaction is $350,000. If Hurwitz LLC takes back a note as part of the proceeds, what is Hurwitz LLC's gross profit percentage? A. 83.33% B. 71.43% C. 70% D. 50% E. 30%
Blue Company, a calendar year taxpayer, purchased new equipment for $2,100,000 on November 1, 2021 that had a $500,000 salvage value. The equipment was considered 5-year property for tax purposes. Blue sells the purchased equipment for $2,100,000 on December 31, 2021. Assuming Blue has $700,000 taxable income for 2021 and Blue maximizes fırst-year depreciation, compute Blue's realized gain or loss on the equipment sale for 2021, if any. O $0 Realized gain or loss O $1,330,000 Realized gain O $1,400,000 Realized gain O $2,100,000 Realized gain
Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $102,000, and it has claimed $ 33,800 of depreciation expense against the building. Required Assuming that Hauswirth receives $80, 500 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. Assuming that Hauswirth exchanges the warehouse in a like kind exchange for some land with a fair market value of $80, 500, compute Hauswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. Assuming that Hauswirth receives $27,500 in cash in year 0 and a S 88,500 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain or loss in year 0 and in year 1.
Mr. XYZ, is negotiating to buy a parcel of property for his business. The seller of the property is asking P 1,700,000 for the property. The assessed value of the property for tax purposes of P 1,250,000. The property is presently insured by the owner for P 1,350,000. Mr. XYZ, originally offered the seller P 1,300,000 for the property. Mr. XYZ and the seller have agreed on a purchase price of P 1,500,000. Shortly after the purchase is made by Mr. XYZ, he is offered P 1,750,000 for the same property. At what price would Mr. XYZ record the property on the books of his business?
During the current year, TLI Corporation sells a tract of land for $90,000. The sale is made to Sophie, TLI Corporation's sole shareholder. TLI Corporation originally purchased the land five years earlier for $121,000. Read the requirements. Requirement a. What is the amount of gain or loss that TLI Corporation will recognize on the sale during the current year? First, calculate the gain or loss realized and then calculate the gain or loss recognized in the current year. (For a gain or loss with a zero value, enter $0 and select N/A.) Amount Gain or loss Gain or loss realized Gain or loss recognized Requirements a. What is the amount of gain or loss that TLI Corporation will recognize on the sale during the current year? b. Assume that in the following year, Sophie sells the land for $111,000. What is the amount of gain or loss Sophie will recognize? What are the tax consequences to TLI Corporation upon the subsequent sale by Sophie? c. Assume that in the following year, Sophie sells…
This year, Neil Incorporated exchanged a business asset for an investment asset. Both assets had a $932,000 appraised FMV. Neil’s book basis in the business asset was $604,600, and its tax basis was $573,000. Three years after the exchange, Neil sold the investment asset for $1,000,000 cash. Required: Compute Neil’s book gain and tax gain on sale assuming Neil acquired the investment asset in a taxable exchange. Compute Neil’s book gain and tax gain on sale assuming Neil acquired the investment asset in a nontaxable exchange.
Leon sells his interest in a passive activity for $165,500. Determine the tax effect of the sale based on each of the following independent facts: If an amount is zero, enter "0". a. Adjusted basis in this investment is $57,925. Losses from prior years that were not deductible due to the passive activity loss restrictions total $63,718. The The suspended losses at the end of the year are IS b. Assume the same sales price but the adjusted basis in this investment is $124,125. Losses from prior years that were not deductible due to the passive activity loss restrictions total $63,718. The IS The suspended losses at the end of the year are $ The c. Assume the same sales price but the adjusted basis in this investment is $124,125. Losses from prior years that were not deductible due to the passive activity loss restrictions total $63,718. In addition, suspended credits total $16,550. is The suspended losses at the end of the year are $ The suspended credits at the end of the year are
Firm P, a noncorporate taxpayer, purchased residential realty in 1985 for $1,000,000. This year it sold the realty for $450,000. Through date of sale, Firm P deducted $814,000 accelerated depreciation on the realty. Straight-line depreciation would have been $625,000. Required: Determine the amount and character of Firm P's recognized gain on sale. How would your answer change if Firm P was a corporation? Using template: 1. Realized and recognized gain 2. Ordinary income 3. Section 1231 gain
in year 0, Longworth Partnership purchased a machine for $40,000 to use in its business. In year 3, Longworth sold the machine for $35,000. Between the date of purchase and the date of the sale, Longworth depreciated the machine by $22,000. What are the amount and character of the gain or loss Longworth will recognize on the sale? What are the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are increased to $45,000? What are the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are decreased to $15,000?
Heron Company purchases commercial realty on November 13, 2003, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 22, 2021, for $850,000. What are the tax consequences of the sale of realty if Heron is (a) a C corporation and (b) a sole proprietorship? a. If Heron is a C corporation, what is the amount of each type of gain recognized? If an amount is zero, enter "0". Round your answers to the nearest dollar. Character of Gain Ordinary income under § 1245 Ordinary income under § 1250 Ordinary income under § 291. § 1231 gain Total recognized gain 287,492 X § 1231 gain Total recognized gain 0 57,498 429,994 487,492 b. If Heron is a sole proprietorship, what is the amount of each type of gain recognized? Character of Gain Ordinary income under § 1245 Ordinary income under 5 1250 Ordinary income under § 291 0 0 0 487,492 487,492 ✓
Verlin sells a commercial building and receives $50,000 in cash and a note for $60,000 at 10 percent interest. Verlin's adjusted basis in the building on the date of sale is $45,000 and he collects only the $50,000 down payment in the year of the sale. a. If Verlin elects to recognize the total gain on the property in the year of sale, calculate the taxable gain. b. Assuming Verlin uses the installment sale method, calculate the taxable gain he must report for the year of the sale. c. Assuming Verlin collects $10,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized under the installment sale method.
Firm R owned depreciable real property subject to a $300,000 nonrecoursemortgage. The property’s FMV is only $250,000. Consequently, the firm surrenderedthe property to the creditor rather than continuing to service the mortgage. At date ofsurrender, Firm R’s adjusted basis in the property was $195,000.Required:Determine Firm R’s cash flow consequences of the disposition, assuming that the gainrecognized is taxed at 21 percent.

SEE MORE QUESTIONS

Recommended textbooks for you

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

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

Individual Income Taxes

Accounting

ISBN:

9780357109731

Author:

Hoffman

Publisher:

CENGAGE LEARNING - CONSIGNMENT

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

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

Individual Income Taxes

Accounting

ISBN:

9780357109731

Author:

Hoffman

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Income Tax Fundamentals 2020

Accounting

ISBN:

9780357391129

Author:

WHITTENBURG

Publisher:

Cengage

SWFT Individual Income Taxes

Accounting

ISBN:

9780357391365

Author:

YOUNG

Publisher:

Cengage

SWFT Comprehensive Vol 2020

Accounting

ISBN:

9780357391723

Author:

Maloney

Publisher:

Cengage

SEE MORE TEXTBOOKS