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 all the values as positive numbers Description (1) Amount Realized (2) Adjusted Basis (3) Gain realized (4) Gross Profit Percentage (5) Payment received in year 0 Gain/loss recognized in year 0 Tax Character Other §1231 gain Unrecaptured §1250 (§1231 gain) $ $ ✓$ 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). Note: Round your final answers to the nearest whole dollar amount. Input all the values as positive numbers. ✓$ ✓ $ $ $ Amount Amount 0x 0x 0x 0X % 0x 0x 0X $ 0x Tax 0x 0x 0
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 all the values as positive numbers Description (1) Amount Realized (2) Adjusted Basis (3) Gain realized (4) Gross Profit Percentage (5) Payment received in year 0 Gain/loss recognized in year 0 Tax Character Other §1231 gain Unrecaptured §1250 (§1231 gain) $ $ ✓$ 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). Note: Round your final answers to the nearest whole dollar amount. Input all the values as positive numbers. ✓$ ✓ $ $ $ Amount Amount 0x 0x 0x 0X % 0x 0x 0X $ 0x Tax 0x 0x 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 all the values as positive numbers
Description
(1) Amount Realized
(2) Adjusted Basis
(3) Gain realized
(4) Gross Profit Percentage
(5) Payment received in year 0
Gain/loss recognized in year 0
Tax
Character
Other §1231 gain
Unrecaptured §1250 (§1231 gain)
$
$
$
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).
Note: Round your final answers to the nearest whole dollar amount. Input all the values as positive numbers.
✓$
$
$
Amount
Amount
0X $
0X
0X
0x
0 X %
0x
0x
$
Tax
XXX
0x
0x
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