Lauren's factory was destroyed by a fire on March 3, 2022. Her basis in the factory was $100,000. On October 31, she received insurance proceeds of $150,000 as a reimbursement for her loss. On December 11, Lauren purchased a new factory for $140,000. When Lauren files her 2022 tax return, she will elect to defer as much gain as possible. What is the amount of Lauren's recognized gain or loss from the involuntary conversion? $50,000 gain Oa. Ob. ($50,000) loss OC. No gain or loss O d. $150,000 gain O e. $10,000 gain

Lauren's factory was destroyed by a fire on March 3, 2022. Her basis in the factory was $100,000. On October 31, she received insurance proceeds of $150,000 as a reimbursement for her loss. On December 11, Lauren purchased a new factory for $140,000. When Lauren files her 2022 tax return, she will elect to defer as much gain as possible. What is the amount of Lauren's recognized gain or loss from the involuntary conversion? $50,000 gain Oa. Ob. ($50,000) loss OC. No gain or loss O d. $150,000 gain O e. $10,000 gain

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Martha sells her house to Sachin on November 1, 2010, for $480,000. On December 5, the property tax bill from the county is for $4,800, Sachin concludes that he owes only for the months of November and December and that the other $4,000 is Martha’s liability. On Schedule A of Form 1040 for 2010, Sachin deducts the $800 of property tax he paid. When Sachin tries to sell his house 18 months later, he discovers that the county has placed a lien on the property. In order to get a clear title, he pays the $4,000 of property taxes due. He subsequently sells his house for a recognized gain of $38,000. Sachin deducts the $4,000 of property taxes that relate to the period Martha owned the house of Schedule A of his 2012 tax returns. Has Sachin acted properly? Why or why not?
In 2023, Tom and Alejandro Jackson (married filing jointly) have $248,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) a. On May 12, 2023, they sold a painting (art) for $116,000 that was inherited from Grandma on July 23, 2021. The fair market value on the date of Grandma's death was $93,000, and Grandma's adjusted basis of the painting was $26,200. b. They applied a long-term capital loss carryover from 2022 of $10,600. c. They recognized a $12,300 loss on the 11/1/2023 sale of bonds (acquired on 5/12/2013). d. They recognized a $4,360 gain on the 12/12/2023 sale of IBM stock (NYSE: IBM) (acquired on 2/5/2023). e. They recognized a $18,440 gain on the 10/17/2023 sale of rental property (the only §1231 transaction), of which $8,960 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,480 is subject to the 0, 15, or 20 percent maximum rates (the property was acquired on…
Callie Cooper purchased two pieces of property in 1990: Property Q cost $15,000 and Property R cost $30,000. In 2020, when Callie died, she left the property to her daughter, Christy. At that time, Property Q had appreciated in value to $80,000 while Property R had declined in value, now worth only $10,000. What is Christy’s basis in each piece of property? What are the tax consequences of the changes in value of the properties from the time of original purchase to the death of Callie?
In 2020, Susan (who files as single) had silverware worth $10,000 (basis $6,000) stolen from her home due to a federal declared disaster area. Her insurance company told her that her policy did not cover the theft. In 2020, Susan’s other itemized deductions were $2,000, and she had AGI of $40,000. In February 2021, Susan’s insurance company decided that Sarah’s policy did cover the theft of the silverware and they paid Susan $4,000. Determine the tax treatment of the $4,000 received by Susan during 2021. a. None of the $4,000 should be included in gross income. b. $2,000 should be included in gross income. c. $4,000 should be included in gross income. d. Last year’s return should be amended to include the $4,000.
Noelle's diamond ring was stolen in 2017. She originally paid $15,400 for the ring, but it was worth considerably more at the time of the theft. Noelle filed an insurance claim for the stolen ring, but the claim was denied. Because the insurance claim was denied, Noelle took a casualty loss deduction for the stolen ring on her 2017 tax return. In 2017, Noelle had AGI of $77,000. After Noelle threatened legal action in early 2019, the insurance company had a "change of heart" and sent Noelle a check for $9,240 for the stolen ring. The per-event floor is $100. What is the proper tax treatment of the $9,240 Noelle received from the insurance company in 2019? Noelle should _______the amount of______.
Katrina, age 58, rented (as a tenant) the house that was her principal residence from January 1, 2019 through December 31, 2020. She purchased the house on January 1, 2021, for $150,000 and continued to occupy it through June 30, 2022. She leased it to a tenant from July 1, 2022, through December 31, 2023. On January 1, 2023, she sells the house for $350,000. She incurs a realtor’s commission of $20,000. (1) Calculate her recognized gain if her objective is to minimize the recognition of gain and she does not intend to acquire another residence. (2) Explain your answer.
In 2022, Tom and Alejandro Jackson (married filing jointly) have $232.000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) a. On May 12, 2022, they sold a painting (art) for $114,000 that was inherited from Grandma on July 23, 2020. The fair market value on the date of Grandma's death was $92,000, and Grandma's adjusted basis of the painting was $25,800. b. They applied a long-term capital loss carryover from 2021 of $10,400. c. They recognized a $12,200 loss on the 11/1/2022 sale of bonds (acquired on 5/12/2012). d. They recognized a $4,240 gain on the 12/12/2022 sale of IBM stock (acquired on 2/5/2022). e. They recognized a $17,960 gain on the 10/17/2022 sale of rental property (the only 51231 transaction), of which $8,640 is reportable as gain subject to the 25 percent maximum rate and the remaining $9.320 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2016). f. They…
Robert acquired his rental property 10 years ago for $110,000 and sold it in the current year for $230,000. The accumulated straight-line depreciation on the property at the time of the sale was $35,000. Robert is in the 32 percent tax bracket for ordinary income. What is Robert’s gain on the sale of his rental property? How is the gain taxed? (i.e., what tax bracket is the gain subject to)?
Norma, a widow, has made lifetime gifts to her two grandchildren in an effort to reduce the size of her gross estate. In 2012, Norma made a $100,000 taxable gift. She made another $150,000 taxable gift in 2014. She used her gift tax applicable credit amount to offset any gift tax liability for all gifts. What amount of gift tax applicable credit remains available to Norma in 2022? A)$4,641,000 B)$70,800 C)$4,656,000 D)$4,699,000
Joyce is a widowed taxpayer whose husband Willard passed away on March 31, 2020. Joyce and Willard had purchased a home for $215,000 on September 12, 2004, lived in the home as their main home until Willard's death. Joyce moved in with her daughter after Willard's death, and sold the home on November 30, 2020 , for $595,000. How much of the gain on the sale can Joyce exclude from taxable income? Select one: O a. $500,000, the maximum exclusion for an unmarried surviving spouse O b. $380,000, the amount of gain on the sale of the home O C. $250,000, the maximum exclusion amount for a single taxpayer O d. $0, because she moved out before she sold the home
In 2021, Tom and Amanda Jackson (married filing jointly) have $252,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) On May 12, 2021, they sold a painting (art) for $116,500 that was inherited from Grandma on July 23, 2019. The fair market value on the date of Grandma’s death was $93,250 and Grandma’s adjusted basis of the painting was $26,300. They applied a long-term capital loss carryover from 2020 of $10,650. They recognized a $12,325 loss on the 11/1/2021 sale of bonds (acquired on 5/12/2011). They recognized a $4,390 gain on the 12/12/2021 sale of IBM stock (acquired on 2/5/2021). They recognized a $18,560 gain on the 10/17/2021 sale of rental property (the only §1231 transaction), of which $9,040 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,520 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2015). They recognized a $12,650…
On July 1, 2019, Ted, age 73 and single, sells his personal residence of the last 30 years for $368,000. Ted's basis in his residence is $48,776. The expenses associated with the sale of his home total $22,080. On December 15, 2019, Ted purchases and occupies a new residence at a cost of $175,000. Calculate Ted's realized gain, recognized gain, and the adjusted basis of his new residence. Realized gain $ Recognized gain $ Adjusted basis of the new residence $