LO.1 Heron Company purchases commercial realty on November 13, 2005, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 22, 2023, for $850,000. What are the tax consequences of the sale of realty if Heron is: a. AC corporation? b. A sole proprietorship?

LO.1 Heron Company purchases commercial realty on November 13, 2005, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 22, 2023, for $850,000. What are the tax consequences of the sale of realty if Heron is: a. AC corporation? b. A sole proprietorship?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter12: Corporations: Organization, Capital Structure, And Operating Rules

Section: Chapter Questions

Problem 19P

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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 ✓
Heron Company purchases commercial realty on November 13, 2002, for $650,000. Straight-line depreciation of $287,492 is claimed before the property is sold on February 22, 2020, for $850,000. What are the tax consequences of the sale of realty if Heron is: A C corporation?
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3. Jake purchased a $235,000 crane for his construction business. He sold the crane for $175,000 after taking $115,000 of depreciation. Assume Jake is 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?
i. Assume Hermione's adjusted tax basis in the land was $381,250. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. j. Assume Hermione's adjusted tax basis in the land was $381,250. What election can Hermione and Wiley Corporation make to allow Wiley Corporation to take a carryover basis in the land?
LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation received 50,000 in 2019 and a note payable (with adequate interest) for 150,000 to be paid in 2021. Carl Corporations cost of the land was 80,000. The corporation has a 90,000 net capital loss carryover that will expire in 2019. Should Carl Corporation report the sale in 2019 or use the installment method to report the income as payments are received?
LO.3 Garnet incurs the following capital asset transactions during the year. Further, Garnet has an excess capital loss carryforward of 6,000 from last year. a. What are the tax consequences of these transactions if the 6,000 loss is long term and Garnet is an individual? Garnet is a C corporation? b. What are the tax consequences of these transactions if the 6,000 loss is short term and Garnet is an individual? Garnet is a C corporation?
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Which of the following assets is NOT subject to capital gains tax? Select one: Shares acquired in October 1985 and sold for profit in 2020 Rare coin acquired for $550 and sold for $1,000 Sale of the tax payer's main residence All of the options will attract CGT Canoe acquired for $12,000 and sold for $15,000
Which of the following are subjected to Value Added Tax (VAT)? A Sale by a real estate dealer of residential lot with a selling price or P800,000. B Sale by a real estate dealer of residential lot with a selling price of P3,500,000. C Sale by a real estate dealer of commercial lot with a selling price of P2,800,000. D Sale of residential lot classified as capital asset. E Sale by a real estate dealer of residential house and lot with a selling price of P3,000,000 F Sale by a real estate dealer of condominium unit with a selling price of P3,250,000 G Sale by a real estate dealer of parking lot in a condominium unit with a selling price of P850,000. H Sale of residential house and lot classified as capital asset with a selling price of P8,000,000.
Problem 15-33 (LO. 6) Save, Inc., an exempt organization, sells the following assets during the tax year. Asset Gain (Loss) Use Land and building $100,000 In exempt purpose Land 25,000 In exempt purpose Equipment (12,000) Automobile (9,000) Leased to a taxable entity Leased to a taxable entity If an amount is zero, enter "0". Determine the effect of these transactions on Save's unrelated business taxable income. Save, Inc.'s has a net gain of $ 20,000 X Accordingly, this is a negative adjustment in computing UBTI.