Laurie has owned and occupied her personal residence (adjusted basis $190,000) for 4 years. In April 2023, she sells the residence for $300,000 and had to pay her real estate agent $20,000 in commission related to this sale. On the same day as the sale, Laurie purchased another residence for $350,000. Because of the noisy neighbors, she sells the new house after just 10 months. The selling price is $483,000 and she had to pay her real estate agent $18,000 in commission related to this sale. a) What is Laurie's recognized gain on the sale of the first residence? b) What is Laurie's recognized gain on the sale of the second residence? c) Assume instead that the sale of the second residence was due to Laurie's job transfer to another state. What is Laurie's recognized gain on the sale of the second residence?

Laurie has owned and occupied her personal residence (adjusted basis $190,000) for 4 years. In April 2023, she sells the residence for $300,000 and had to pay her real estate agent $20,000 in commission related to this sale. On the same day as the sale, Laurie purchased another residence for $350,000. Because of the noisy neighbors, she sells the new house after just 10 months. The selling price is $483,000 and she had to pay her real estate agent $18,000 in commission related to this sale. a) What is Laurie's recognized gain on the sale of the first residence? b) What is Laurie's recognized gain on the sale of the second residence? c) Assume instead that the sale of the second residence was due to Laurie's job transfer to another state. What is Laurie's recognized gain on the sale of the second residence?

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

In 2016, José purchased a house for $325,000 ($300,000 relates to thehouse; $25,000 relates to the land). He used the house as his personalresidence. In March 2019, when the fair market value of the house was $400,000, he converted the house to rental property. What is José’s cost recovery for 2019?
In 2011, Avery bought a gold necklace for her own use at a cost of $8,000. In 2018 when the fair market value of the gold necklace was $10,000, Avery gave this necklace to her daughter Bella. Later in 2018, Bella sold the necklace for 10,500. What is Bella's taxable gain for the sale of the necklace ?
On August 31, 2020, Nolan and Lei, who file a joint return and live in Charleston, South Carolina, sell their personal residence, which they have owned and lived in for 10 years. The realized gain of $305,800 was excluded under § 121. They purchased another personal residence in Charleston for $489,280 on September 1, 2020. In 2021, Nolan's employer transfers him to Houston, Texas. The couple sells the Charleston home on February 28, 2021, and purchases a new home in Houston. The realized gain on the second sale is $275,220. Do not round any division. What is Nolan and Lei's recognized gain on the second sale?
Amanda purchased a home for $500,000 in 2016. She paid $100,000 cash and borrowed the remaining $400,000. This is Amanda's only residence. Assume that in year 2023, when the home had appreciated to $750,000 and the remaining mortgage was $300,000, interest rates declined and Amanda refinanced her home. She borrowed $500,000 at the time of the refinancing, paid off the first mortgage, and used the remainder for purposes unrelated to the home. What is her total amount of acquisition indebtedness for the purposes of determining the deduction for home mortgage interest? (Assume not married filing separately.)
James and his wife, Carla sell their personal residence which they have occupied for three years on November 11th 2020 for a total sum of $800,000. They made renovations in preparation for the sale in the amount of $25,000 and the costs of selling the house were $10,000. Their cost basis in the home was $250,000. On November 30, they occupied a new home that they purchased for $350,000. Calculate: (a) their realized gain on the sale of the residence (b) their recognized gain on the sale (c) their adjusted basis in the new residence.
I hire Susan to sell my house. I tell her that I'm hoping to get $200,000 for the house. She tells me she needs $2,000 to make repairs on the house before it is listed for sale. I give her the $2,000. She takes my money but never makes the repairs. The house sells for $220,000. If Susan is ordered to pay restitution, she will have to pay $ 2000
Estelle owns The Estelle Talent Agency in New York. On November 10, 2020, she purchased office furniture (7-year property) for $500,000. In addition, she purchased a printing machine (7-year property) on February 22, 2020 for $200,000. The office furniture and printing machine were the only two assets Estelle purchased in 2020, and she placed them into business use on the respective date of the purchase. Estelle has chosen not to elect bonus depreciation or Section 179 expensing for either asset. Answer the following two questions. For credit, you must round your answer to the NEAREST DOLLAR. Do NOT enter the dollar sign in your answer - only enter the numbers (e.g., X,XXX). For example, one thousand dollars should be entered as 1,000. Enter zero (i.e., “0”) where necessary. (b) Assume that Estelle sells the printing machine on June 1, 2022. What is Estelle’s cost recovery deduction for the printing machine in 2022? $
Mona owns a rental house that she has rented to various tenants since September of 2001. The backyard fence fell into disrepair in June of 2018. She had it replaced June 27th, 2018 for $8,399. lf Mona elects to use special depreciation for the new fence, what is the amount of current depreciation (excluding the amount of current special depreciation) for thisasset? a) $0b) $210c) $315d) $420
Tamar owns a condominium near Cocoa Beach in Florida. In 2023, she incurs the following expenses in connection with her condo: $ 650 950 5,200 1,190 1,030 1,000 10,700 Insurance Advertising expense Mortgage interest Property taxes Repairs & maintenance Utilities Depreciation During the year, Tamar rented out the condo for 97 days, receiving $34,500 of gross income. She personally used the condo for 57 days during her vacation. Tamar's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property. Assume Tamar uses the Tax Court method of allocating expenses to rental use of the property. Assume 365 days in the current year. Note: Do not round apportionment ratio. Round all other dollar values to the nearest whole dollar amount. Required: a. What is the total amount of for AGI (rental) deductions Tamar may deduct in the current year related to the condo (assuming she itemizes deductions before considering…
Amanda purchased a home for $860,000 in 2016. She paid $172,000 cash and borrowed the remaining $688,000. This is Amanda's only residence. Assume that in year 2021 when the home had appreciated to $1,290,000 and the remaining mortgage was $516,000, interest rates declined and Amanda refinanced her home. She borrowed $860,000 at the time of the refinancing, paid off the first mortgage, and used the remainder for purposes unrelated to the home. What is her total amount of her amount of acquisition indebtedness for purposes of determining the deduction for home mortgage interest? (Assume not married filing separately.) Multiple Choice ___ $516,000. ___ $645,000. ___ $860,000. ___ $946,000.
Sally owns real property for which the annual property taxes are $14,080. She sells the property to Kate on March 9, 2018, for $704,000. Kate pays the real property taxes for the entire year on October 1, 2018. Assume a 365-day year. Round any division to four decimal places. Round your final answers to the nearest dollar. 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 the taxes were paid by Sally? HINT: THESE ANSWERS ARE ALL WONRG. a Amount of property taxes that can be deducted by Sally and Kate Sally Annual Property Taxes $14,080 Days in a year 365 Property tax per day $38.58 Tax for 67 days upto March 9, 2018 $2,585 Kate Tax for 298 days from March 9, 2018 $11,495 b Property tax apportionment will increase the…
Tamar owns a condominium near Cocoa Beach in Florida. In 2022, she incurs the following expenses in connection with her condo Insurance Advertising expense Mortgage interest Property taxes Repairs & maintenance : Utilities Depreciation $1,100 550 3,850 945 700 1,000 9,500 During the year, Tamar rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation. Tamar's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property. Problem 14-58 Parts a, b, c, d & e (Algo) Assume Tamar uses the IRS method of allocating expenses to rental use of the property. Required: a. What is the total amount of for AGI (rental) deductions Tamar may deduct in the current year related to the condo? b. What is the total amount of itemized deductions Tamar may deduct in the current year related to the condo? c. If Tamar's basis in the condo at the beginning of the…