Two years ago, on March 1, 2020 Markbought a new tractor. Mark traded hisold tractor which had a remaining bookvalue of 5,214. Mark paid $25,000'down" and financed the remaining $50,000 over 5 years at 6% interest. Heelected to roll the remaining basis of hisold tractor into the new one. If Mark didnot expense any of the cost of the tractorand he chose to use regular MACRS andmid-year convention for his 2020depreciation, then his 2021 depreciationwill be? Group of answer choices.8,594.13 12,347.34 15, 347.34 20, 454.57

Part 2: Approach to solving the questionTo calculate the depreciation for 2021, we need to…

Answered: Two years ago, on March 1, 2020 Mark…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter17: Property Transactions: § 1231 And Recapture Provisions

Section: Chapter Questions

Problem 22CE

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Chris purchased a new John Deere tractor for his farming business on 15 May 2018. He paid $45 000 cash for the tractor because he traded in an old tractor and was allowed $25 000 against the price of the new tractor. If he did not have the old tractor to trade-in the new John Deere would have cost $70 000. He expects that the tractor will be useful for 8 years and he wishes to depreciate the tractor using the diminishing value method. What amount can Chris claim as a deduction (to the nearest $) for the year ended 30 June 2020? Hint - you must first calculate depreciation for the 2018- & 2019-income years. Select one: 1.$2205. 2.$16 949. 3.$12 702. 4.$6129. 5.$9534
Brian acquired a rental house in 2004 for a cost of $80,000. Straight-line depreciation on the property of $26,000 has been claimed by Brian. In January 2020, he sells the property for $120,000, receiving $20,000 cash on March 1 and the buyer's note for $100,000 at 10 percent interest. The note is payable at $10,000 per year for 10 years, with the first payment to be received 1 year after the date of sale. Calculate his taxable gain under the installment method for the year of sale of the rental house. In your computations, round any division to two decimal places. Gain reportable in 2020 is $fill in the blank 1.
Brian acquired a rental house in 2003 for a cost of $80,000. Straight-line depreciation on the property of $26,000 has been claimed by Brian. In January 2019, he sells the property for $120,000, receiving $20,000 cash on March 1 and the buyer's note for $100,000 at 10 percent interest. The note is payable at $10,000 per year for 10 years, with the first payment to be received 1 year after the date of sale. Calculate his taxable gain under the installment method for the year of sale of the rental house. In your computations, round any division to two decimal places. Gain reportable in 2019 is $.
Jasmine owned rental real estate that she sold to her tenant in an instalment sale. Jasmine acquired the property in 2007 for 400,000; took 178,000 of depreciation on it; and sold it for 210,000, receiving 25,000 immediately and the balance (plus interest at a market rate) in equal payments of 18,500 for 10 years. a. What is the nature of the recognized gain or loss from this transaction? b. Assuming that the interest rate on the installment contract is 5%, what is the present value of the installment payments? See Appendix H for present value factors.
Reva originally sold her principal residence in an installment sale for 150000. Her adjusted basis in the home was 110000. at that time. Three years later, she repossessed the home from the buyer whan the balance of the note was 135000. She resold it within one year for 160000. Original sale expenseses were 3750, and resale expenses were 4000. Repossession cost were 3800. She incurred 3200 for improvements prior to the resale. What is Reva's basis in the repossessed property
Alex purchased a CNC machine on 1st October 2019 at a cost of $110,000 (including GST). This machinery is estimated to have a useful life of seven years. Alex purchased a Holden car on 1 May, 2019 at a cost of $63,000, estimated to have a useful life of five years. Required:With reference to relevant legislation and case law, discuss and calculate what amount is allowed as a deduction for the decline in value of the machinery and the Holden car discussed above, using both prime cost and diminishing value methods. (10 marks, maximum 200 words)
Steve Drake sells a rental house on January 1, 2019, and receives $100,000 cash and a note for $50,000 at 7 percent interest. The purchaser also assumes the mortgage on the property of $25,000. Steve's original cost for the house was $170,000 on January 1, 2011 and accumulated depreciation was $27,000 on the date of sale. He collects only the $100,000 down payment in the year of sale. c. Assuming Steve collects $5,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized in that year under the installment sale method
Steve Drake sells a rental house on January 1, 2022, and receives $100,000 cash and a note for $50,000 at 7-percent interest. The purchaser also assumes the mortgage on the property of $30,000. Steve's original cost for the house was $175,000 on January 1, 2014, and accumulated depreciation was $30,000 on the date of sale. He collects only the $100,000 down payment in the year of sale. a. If Steve elects to recognize the total gain on the property in the year of sale, calculate the taxable gain. b. Assuming Steve uses the installment sale method, complete Form 6252 on Page 8-57 for the year of the sale. c. Assuming Steve collects $5,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized in that year under the installment sale method
On April 30, 2019, Leo purchased and placed in service a new car that cost $76,200. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any § 179. If required, round your answers to the nearest dollar. a. What MACRS convention applies to the new car? Half-year. b. Is the automobile considered "listed property"? Yes. c. Leo's cost recovery deduction in 2019 is $_______ and for 2020 is $_______.
On September 30 of last year, Rex received some investment land from Holly as a gift. Holly's adjusted basis was $50,000 and the land was valued at $40,000 at the time of the gift. Holly acquired the land five years ago. What are the amount and character of Rex's recognized gain (loss) if he sells the land on May 12 this year at the following prices? (Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable.) b. Land sold for $70,000 Amount
On September 30 of last year, Rex received some investment land from Holly as a gift. Holly's adjusted basis was $50,000 and the land was valued at $40,000 at the time of the gift. Holly acquired the land five years ago. What are the amount and character of Rex's recognized gain (loss) if he sells the land on May 12 this year at the following prices? (Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable.) a. Land sold for $32,000 Amount
On September 30 of last year, Rex received some investment land from Holly as a gift. Holly’s adjusted basis was $50,000 and the land was valued at $40,000 at the time of the gift. Holly acquired the land five years ago. What is the amount and character of Rex’s recognized gain (loss) if he sells the land on May 12 this year at the following prices? (Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable.) a. $32,000 b. $70,000 c. $45,000

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