Question: TaraTara owns a house that shehas been living in for eight years. Shepurchased the house for $260,000 and theFMV today is $230,000. She is moving intoher friend's house and has decided toconvert her residence to rental property.Assume 10% of the property's value isallocated to land. Read the requirements:If she claims depreciation of $20,700 andsells the property, six years later for$275,000 (10% allocated to land),determine the gain on the sale of thebuilding and gain on the sale of the land.

Let's go through the calculations again in a detailed manner to ensure accuracy and clarity.…

Answered: Question: TaraTara owns a house that…

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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On February 8, 2020, Holly purchased a residential apartment building. The cost basis assigned to the building is $209,000. Holly also owns another residential apartment building that she purchased on July 15, 2020, with a cost basis of $384,200. a. Calculate Holly's total depreciation deduction for the apartments for 2020 using MACRS.
Scutty Marrison lives in Frankston, Melbourne. In January 2022, he receives a job offer to work in Indonesia for the next 3 years and decides to accept it. Prior to moving, Scutty decides to dispose of the following assets: 1. His investment property for $600,000. Scutty's constructed his investment property on 1 September 2000 at cost of $60,000 on a block of land which he purchased on 1 February 1984. The land value at the time of constructing the investment property was $120,000.2. A piano. The piano was purchased on 1 September 2010 for $12,000 and sold on 31 December 2021 for $5,000.3. His bank shares. His shares were bought on 1 December 2018 for $32,000 and sold on 1 May 2022 for $16,000.4. His private townhouse. He bought his home in February 2018 for $600,000 and has been living in it since then. He sold it on 1 June 2022 for $900,000. Scutty also had capital losses from a previous year for the sale of an antique piece of artwork for $2,000. Required: Calculate Scutty…
George and Almaida sold their property. The deposit was $40,000 and was paid to the real estate broker. The total commission was $34,400. Will George and Almaida get the difference back, and if yes, how?
Barbara sells vacant land that was held for investment in her business for $274,000. The land had an adjusted basis of $57.540. The buyer has offered to pay for the land with $61,000 cash at the date of sale and then in three equal installments of $71,000 over the next three years beginning on January 1 of the next year. What is Barbara's realized and recognized gain in each year of the sale? Assume that adequate interest is paid in addition to the numbers shown above. Realized gain Recognized gain in year 1 Recognized gain in year 2 Recognized gain in year 3 Recognized gain in year 4 $ $ $ $ 216,460 45.457 48,190 48,190 48,190
Brian owns a duplex used as rental property. The duplex has a basis of $84,000 and $380,000 FMV. He transfers the duplex to Carrie,his sister, in exchange for a triplex that she owns. The triplex has a basis of $280,000 and a $380,000 FMV. Two months after the exchange, Carrie sells the duplex to a business associate for $395,000. Requirements Determine: a. Brian's realized and recognized gain on the exchange. b. Carrie's realized and recognized gain on the exchange. Requirement a. Determine Brian's realized and recognized gain on the exchange. Begin with the realized gain. First identify the formula, then enter the applicable amounts and calculate the realized gain. Amount realized (Brian) - Adjusted basis (duplex) = Realized gain $380,000 - $84,000 = $296,000 Determine Brian's recognized gain on the exchange. The recognized gain is $ .
Ringo owns 5 acres of rental property. Yoko rents the property to graze cows for one year and pays the rent with autographed copies of old records autographed by her late husband John. The lease called for rent of $10,000. How much income will Ringo recognize?
mary is starting her own horse racing and breeding farm in paducah, KY in the current year. She purchased the following assets on April 28: one year old filly=4380, machinery= 34800, light duty truck= 44200, and land=67200. If mary does not elect section 179 or use bonus depreciation, what is her first year depreciation deduction?
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $312,000. Ingrid allocated $52,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3?
The Lyns live in their own home at 40 Cavin Ave, on which they have a mortgage balance of $2,000,000. This property has been appraised at $8,500,000 and is now up for sale at its current market value. A purchaser has been identified but the proceeds from the sale is not due to be paid to the Lyns until November30, 2020. In the meantime the Lyns have contracted to purchase a new home at Wex Haven for $17,000, 000, although this property is valued at only $16,000,000. The sale agreement on this property requires a deposit of 20% on signing which will take place on June 1, 2020, with the balance which will not be covered by a mortgage, payable in 30 days after signing. Based on their high salaries, North Caribbean Building Society have pre-approved the Lyns for a 25-year mortgage of 75% of purchase price or value, whichever is less, up to a maximum of $20,000,000. This will attract an interest rate of 5.50% per annum with monthly compounding and will be disbursed on September 30,…
Each of the following individuals purchased their property five years ago with the intention of using it as a vacation home. They have all rented out their property during periods when they could not get away. Which taxpayer has taxable income from renting their property in the current year? (a) Deborah. She used her beach cottage personally for 40 days and rented it to a friend for 13 days at fair rental value. (b) Lillian. She used her forest cabin personally for 10 days. She rented the property at fair rental value for 12 days using an online platform. She received a Form 1099-K, Payment Card and Third Party Network Transactions, reporting a gross payment amount of more than $600. (c) Kevin. He used his mountain lodge personally for 34 days and allowed his brother to stay there rent-free for 10 days. (d) Terrell. His lakefront condominium was not used for personal purposes at any time during the year. He rented the property to a co-worker at fair rental value for 18 days.
Review the following scenario. Use the information provided to answer questions about the taxpayer’s 2020 return.Liam Hernandez (38) paid $112,000 for a single-family home on July 1, 2020, and immediately placed it in service as a residential rental property. At the time, the land was valued at $10,000. The property generated $6,000 in rental income for the year. Liam’s only expenses consisted of depreciation, $500 in insurance, and $750 in real estate taxes.Liam is not a real estate professional, but he does actively participate in his rental real estate activity. He did not provide any personal services during the year, although he has notified his tenant that he will make minor repairs to the property as needed. Liam has no other passive income or losses. Question 1 What amount should Liam report for his total rental real estate and royalty income? His partially completed Schedule E, Supplemental Income and Loss, is shown below. You may use the form to assist you in answering this…

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