Property DetailsPurchase Price, Allocation & ClassificationTotal Purchase Price - assume no mortgage loan(purchased and placed in service 9/1/Year 1)Building AllocationLand AllocationDepr ClassificationCapital Additions / Improvements#1 Capital Addition - in service 3/1/Year 2#2 Capital Addition - in service 6/1/Year 3Property SaleSale Price of Property on 10/31/Year 5Year 5 Estimated NOICapitalization RateAttorney Fee for SaleMarginal Tax RateCapital Gains Tax RateMortgage Balance on 10/31/Year 5Broker Fee for Sale$ 750,000Commercial70%30%50,000$ 25,00010/31/Year 5$ 137,50011%550,000$4%3%22%15%1. What is the Before Tax Sale Proceeds from the sale of the Property in Year 5?2. What is the Adjusted Basis for the sale of the Property in Year 5?3. What is the Gain or (Loss) for the sale of the Property in Year 5?4. What is the Tax Expense for the sale of the Property in Year 5?5. What is the After Tax Cash Flow from the sale of the Property in Year 5?

Tax: A tax is an obligatory fee or monetary charge imposed by a government on a person or an entity…

Property Details Purchase Price, Allocation & Classification Total Purchase Price - assume no mortgage loan (purchased and placed in service 9/1/Year 1) Building Allocation Land Allocation Depr Classification Capital Additions / Improvements #1 Capital Addition - in service 3/1/Year 2 #2 Capital Addition - in service 6/1/Year 3 Attorney Fee for Sale Marginal Tax Rate Capital Gains Tax Rate Property Sale Sale Price of Property on 10/31/Year 5 Year 5 Estimated NOI Capitalization Rate Mortgage Balance on 10/31/Year 5 Broker Fee for Sale $ 750,000 Commercial $ $ 70% 30% $ 50,000 25,000 10/31/Year 5 137,500 11% 550,000 4% 3% 22% 15% 1. What is the Before Tax Sale Proceeds from the sale of the Property in Year 5? 2. What is the Adjusted Basis for the sale of the Property in Year 5? 3. What is the Gain or (Loss) for the sale of the Property in Year 5? 4. What is the Tax Expense for the sale of the Property in Year 5? 5. What is the After Tax Cash Flow from the sale of the Property in Year 5?

Property Details Purchase Price, Allocation & Classification Total Purchase Price - assume no mortgage loan (purchased and placed in service 9/1/Year 1) Building Allocation Land Allocation Depr Classification Capital Additions / Improvements #1 Capital Addition - in service 3/1/Year 2 #2 Capital Addition - in service 6/1/Year 3 Attorney Fee for Sale Marginal Tax Rate Capital Gains Tax Rate Property Sale Sale Price of Property on 10/31/Year 5 Year 5 Estimated NOI Capitalization Rate Mortgage Balance on 10/31/Year 5 Broker Fee for Sale $ 750,000 Commercial $ $ 70% 30% $ 50,000 25,000 10/31/Year 5 137,500 11% 550,000 4% 3% 22% 15% 1. What is the Before Tax Sale Proceeds from the sale of the Property in Year 5? 2. What is the Adjusted Basis for the sale of the Property in Year 5? 3. What is the Gain or (Loss) for the sale of the Property in Year 5? 4. What is the Tax Expense for the sale of the Property in Year 5? 5. What is the After Tax Cash Flow from the sale of the Property in Year 5?

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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Question

Property Details
Purchase Price, Allocation & Classification
Total Purchase Price - assume no mortgage loan
(purchased and placed in service 9/1/Year 1)
Building Allocation
Land Allocation
Depr Classification
Capital Additions / Improvements
#1 Capital Addition - in service 3/1/Year 2
#2 Capital Addition - in service 6/1/Year 3
Property Sale
Sale Price of Property on 10/31/Year 5
Year 5 Estimated NOI
Capitalization Rate
Attorney Fee for Sale
Marginal Tax Rate
Capital Gains Tax Rate
Mortgage Balance on 10/31/Year 5
Broker Fee for Sale
$ 750,000
Commercial
70%
30%
50,000
$ 25,000
10/31/Year 5
$ 137,500
11%
550,000
$
4%
3%
22%
15%
1. What is the Before Tax Sale Proceeds from the sale of the Property in Year 5?
2. What is the Adjusted Basis for the sale of the Property in Year 5?
3. What is the Gain or (Loss) for the sale of the Property in Year 5?
4. What is the Tax Expense for the sale of the Property in Year 5?
5. What is the After Tax Cash Flow from the sale of the Property in Year 5?

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Step 2: Compute before tax sale proceeds

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Step 3: Compute Adjusted Basis

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Step 4: Compute Gain/Loss

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Step 5: Compute Tax Expenses

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Step 6: Compute After-Tax Cash Flow

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