Question:Hazel owns an event planning company that specializes in very high-endevents. Several years ago, Hazel purchased a magnificent chocolate fountainfor $3,000 and has since taken $1,200 in depreciation deductions on thefountain. Hazel is now ready to replace the fountain with tools for creating icesculptures, but she is not sure what the tax consequences of selling thefountain will be. Which of the following statements is true regarding the taxconsequences of selling the fountain?a. If Hazel sells the chocolate fountain for $1,800, she will have a $1,200ordinary loss.b. If Hazel sells the chocolate fountain for $1,700, she will have a $100 capitalloss.c. If Hazel sells the chocolate fountain for $2,000, she will have an ordinarygain of $200 and no capital gain.d. If Hazel sells the chocolate fountain for $3,300, she will have a $1,500 capitalgain.

To determine the tax consequences of selling the chocolate fountain, we need to calculate Hazel's…

Answered: Question: Hazel owns an event planning…

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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2. Six years ago, Alvin loaned his prospective brother-in-law, Bruno, $20,000. The money was used to help Bruno pay for the wedding to Alvin's sister Kitty. Shortly after the wedding, it was discovered that Bruno was already married to someone else. Before Bruno could be indicted for bigamy, he disappeared and has not been heard from since. In the current year, Alvin dies still holding onto Bruno's note. For tax purposes, what do you suggest as to the handling of Bruno's note?
A2
Glen Campbell owns a small office building adjacent to an airport. He acquired the property 10 years ago at a total cost of $608,000—that is, $70,000 for the land and $538,000 for the building. He has just received an offer from a realty company that wants to purchase the property; however, the property has been a good source of income over the years, and so Campbell is unsure whether he should keep it or sell it. His alternatives are as follows: a. Keep the property. Campbell's accountant has kept careful records of the income realized from the property over the past 10 years. These records indicate the following annual revenues and expenses: Campbell makes a $13,450 mortgage payment each year on the property. The mortgage will be paid off in eight more years. He has been depreciating the building by the straight-line method, assuming a salvage value of $80,700 for the building, which he still thinks is an appropriate figure. He feels sure that the building can be rented for another…
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Alex purchased a rental house four years ago for $248, 400. Her depreciation at the time of the sale is $ 29,808. Due to a decrease in real estate prices, she sells the house for only $235, 980 in 2023. What is her gain or loss for tax purposes?
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Answer
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