Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2021, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2021, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7, 2021. The closing statement showed the following disbursements: Real estate agent's commission $21,780 Appraisal fee 600 Exterminator's certificate 300 Recording fees 800 Mortgage to First Bank 305,000 Cash to seller 34,520 Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2021, Wesley purchases another residence for $325,000. If an amount is zero, enter "0". a. Calculate Wesley's recognized gain on the sale. b. What is Wesley's adjusted basis for the new residence? c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain? His adjusted basis for the new residence? Wesley's recognized gain is $ and his adjusted basis for the new residence is s

Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2021, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2021, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7, 2021. The closing statement showed the following disbursements: Real estate agent's commission $21,780 Appraisal fee 600 Exterminator's certificate 300 Recording fees 800 Mortgage to First Bank 305,000 Cash to seller 34,520 Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2021, Wesley purchases another residence for $325,000. If an amount is zero, enter "0". a. Calculate Wesley's recognized gain on the sale. b. What is Wesley's adjusted basis for the new residence? c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain? His adjusted basis for the new residence? Wesley's recognized gain is $ and his adjusted basis for the new residence is s

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Adrian is a salesperson who represents several wholesale companies. On January 2, 2019, she receives by mail a commission check from Ace Distributors in the amount of $10,000 and dated December 30, 2018. Adrian is concerned about the year in which the $10,000 is taxable. Although the check is dated 2018, she contends that it would have been unreasonable for her to drive the 50 miles to the Ace offices on a holiday to collect the check. Further, Adrian maintains that even if she had made the trip on a holiday to collect the check, by the time she returned home, her bank would have closed and she could not have received credit for the check until after the first of the year. Adrian would like you to determine whether she should include the $10,000 on her 2018 or 2019 tax return.
Patricia purchased a home on January 1, 2017 for $1,270,000 by making a down payment of $100,000 and financing the remaining $1,170,000 with a 30-year loan, secured by the residence, at 6 percent. During year 2017 and 2018, Patricia made interest-only payments on the loan of $70,000. what amount of the $70,200 interest expense Patricia paid during 2018 may she deduct as an itemized deduction? (Assume not married filing separately.) Multiple Choice ____ $0. ____ $10,200. ____ $60,000. ____ $70,200.
Skip rented an office building to Chris for $1,000 per month. On December 29, 2018, Skip received a deposit of $7,000 in addition to the first and last months' rent. Occupancy began on January 2, 2019. On July 15, 2019, Chrisclosed his business and filed for bankruptcy. Skip had collected rent for February, March, and April on the first of each month. Skip had received May rent on May 10, but collected no payments afterwards. Skip withheld $1,000 from the deposit because of damage to the property and $500 for unpaid rent. He refunded the balance of the deposit to Chris. Requirement What amount would Skip report as gross income for2018? for 2019? Begin by selecting the labels to show the items that will comprise Skip's 2018 gross income, and then enter the amounts to compute the 2018 gross income amount. (If an input field is not used, leave the input field(s) empty; do not select a label or enter a zero.) Taxable item 2018 Gross income…
In 2019, Juan entered into a contract to write a book. The publisher advanced Juan $50,000, which was to be recovered out of future royalties. If the book was not completed by the end of 2020, however, Juan would be required to repay the publisher for the advance. Juan did not complete the book in 2020, and in accor- dance with the agreement, he repaid the $50,000 to the publisher in 2021. Juan is a cash basis taxpayer. What are the tax consequences to Juan of the repayment under the following assumptions? a. Juan’s marginal tax rate was 15% in 2019 and 35% in 2021. b. Juan’s marginal tax rate was 35% in 2019 and 12% in 2021.
11. For 2020, Peggy received a form 1098-E from her federal student loan that showed that she paid $4,600 in interest on a qualified student loan. Her W-2 from her employer shows 79,750 in box 1 and $6,200 in box 2. If these are the only items of income and expense for 2020, what will be Peggy's 1040 show when she files her return using the single filing status? 12. Humphrey was very busy in 2021 and forgot to file his taxes or file an extension by April 15, 2021. When he got around to filing his tax return on June 28th, he found that he owed $1,727 in income tax. How much will Humphrey owe in penalties in addition to the $1,727 for his failure to file and pay on time?
Tabitha sells real estate on March 2 of the current year for $305,200. The buyer, Ramona, pays the real estate taxes of $15,260 for the calendar year, which is the real estate property tax year. Round any division to four decimal places and use in subsequent calculations. Round your final answers to the nearest dollar. Assume a 365-day year. a. Determine the real estate taxes apportioned to and deductible by the seller, Tabitha, and the amount of taxes deductible by Ramona. Tabitha: Ramona: $ b. Calculate Ramona's basis in the property and the amount realized by Tabitha from the sale. Tabitha: $ Ramona: $
Maud, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash method. On February 1, 2019, she leases an office building to use in her business for $183,000 for an 18-month period. To obtain this favorable lease rate, she pays the $183,000 at the inception of the lease. How much rent expense may Maud deduct on her 2019 tax return? Round any calculations to two decimal places and round the final answer to the nearest dollar I thought since she uses the cash method it will be $183000 however that answer is coming back as incorrect. Please help!
On July 1 of year 1, Elaine purchased a new home for $430,000. At the time of the purchase, it was estimated that the property tax bill on the home for the year would be $8,600 ($430,000 * 2%). On the settlement statement, Elaine was charged $4,300 for the year in property taxes and the seller was charged $4,300. On December 31, year 1 Elaine discovered that the real property taxes on the home for the year were actually $9,600. Elaine wrote a $9,600 check to the local government to pay the taxes for that calendar year (Elaine was liable for the taxes because she owned the property when they became due). what amount of real property taxes is Elaine allowed to deduct for year 1? (Assume not married filing separately.) Multiple Choice ___ $0 ___ $4,300. ___ $4,800. ___ $5.300.
Please answer within 40mins. During 2019, Pam was under water in her house. The house was worth $125,000 but she still owed $200,000 on the mortgage. Because Pam had an FHA loan, the bank decided to forgive the remainder of the loan. Right after the loan was discharged, Pam had total assets of $80,000 and total liabilities of $100,000. How much of the $75,000 loan forgiveness must Pam include in her taxable income? a. $75,000 b. $20,000 c. $0 d. $55,000
During 2019, George receives a $60,000 salary and has no deductions for AGI. In 2018, George had a $5,500 STCL and no other capital losses or capital gains. Consider the following sales. i (Click the icon to view the sales.) Requirement Determine George's AGI for 2019. (Assume that the 2018 STCL of $5,500 is before George has taken any capital loss deduction in 2018. Complete all input fields. Enter a "0" for any zero-balances.) Salary Net short-term capital gain (loss) Net long-term capital gain (loss) Total AGI 2019
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…
Steve Grayson, is self-employed age 43. He has established a SEP-IRA for himself several years ago. In 2019, Steve had a $1,000 excess contribution to his SEP-IRA. In 2020. his net earnings from the business are $80,000. He uses the maximum contribution rate for his SEP-IRA account. What amount would Steve's contribution be for 2020. a.) $14,870 b.) $0 c.) $13,870 d.) $57,000