Problem 8-14 Intangibles (LO 8.6) Derek purchases a small business from Art on July 30, 2021. He paid the following amounts for the business: Fixed assets $180,000 Goodwill 40,000 Covenant not to compete 30,000 Total $250,000 a. How much of the $250,000 purchase price is for Section 197 intangible assets? b. What amount can Derek deduct on his 2021 tax return as Section 197 intangible amortization? Use months, not days, in your computations. Round your answer to the nearest dollar.

Problem 8-14 Intangibles (LO 8.6) Derek purchases a small business from Art on July 30, 2021. He paid the following amounts for the business: Fixed assets $180,000 Goodwill 40,000 Covenant not to compete 30,000 Total $250,000 a. How much of the $250,000 purchase price is for Section 197 intangible assets? b. What amount can Derek deduct on his 2021 tax return as Section 197 intangible amortization? Use months, not days, in your computations. Round your answer to the nearest dollar.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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LO.3 Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2019. The assets of the business are: Asset Agnes's Adjusted Basis FMV Accounts receivable $ 70,000 $ 70,000 Inventory 90,000 100,000 Equipment 150,000 160,000 Furniture and fixtures 95,000 130,000 Building 190,000 250,000 Land 25,000 75,000 Total $620,000 $785,000 b. Determine Rod's basis for each of the assets.
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Exercise 6-26 (Algorithmic) (LO. 2) Shanna, a calendar year and cash basis taxpayer, rents property to be used in her business from Janice. As part of the rental agreement, Shanna pays $21,400 rent on April 1, 2022, for the 12 months ending March 31, 2023. Do not round any division. a. How much is Shanna's deduction for rent expense in 2022? 21,800 X b. Assume the same facts, except that the $21,400 is for 24 months' rent ending March 31, 2024. How much is Shanna's deduction for rent expense in 20227 8,175 X Feedback Check My Work A taxpayer's accounting method is a major factor in determining taxable income. The method used determines when an item is includible in income and when an item is deductible on the tax return.
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6. On May 11, 20x8, Taxpayer purchased an office building for $220,000, of which $30,000 was allocated to the land on which the building was located. The building's salvage value was estimated to be $50,000. What amount will Taxpayer deduct for depreciation on his/her 20x9 federal income tax return? A. $ 3,590 B. 4,870 C. 5,640 D. 6,910 E. None of the above
10. COMPUTE: Vanishing deduction 11. COMPUTE: Total ordinary deductions
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Question 27 Gemini Auto Repair is a calendar year taxpayer. In 2019, the repair shop purchased a light weight truck that it used to drive customers back and forth to their cars while the shop worked on their cars (1.e. for business purposes). In 2020, it sold the truck for a total gam of $15,500 and the accumulated depreciation for the truck was $9,300. What was the character of the 2020 gain on the sale of the truck, assuming that Gemini did not sell any other assets that year and that the shop had not had any Sec. 1231 losses in the past 10 years? If there is more than one type of character that is relevant to the gain, state the specific dollar amount associated with each type of character that makes up the total gain and/or income from the sale transaction for Gemani in 2020. OI. $9,300 ordinary income, $6,200 long-term capital gain OII. $15,500 ordinary income only O III. $9,300 ordinary income only O N.S9,300 long-term capital gain only OV. $6,200 ordinary income only O VI.…