Chapter 1, Problem 49DQ

Nicky receives a car from Sam as a gift. Sam paid 48,000 for the car. He had used it for business purposes and had deducted 10,000 for depreciation up to the time he gave the car to Nicky. The fair market value of the car is 33,000. a. Assuming that Nicky uses the car for business purposes, what is her basis for depreciation? b. Assume that Nicky deducts depreciation of 6,500 and then sells the car for 32,500. What is her recognized gain or loss? c. Assume that Nicky deducts depreciation of 6,500 and then sells the car for 20,000. What is her recognized gain or loss?

Anton purchases a building on May 4, 2002, at a cost of $370,000. The land is properly allocated $40,000 of the cost (total cost $410,000). Anton sells the building on October 18, 2020, for $370,000.   If an amount is zero, enter "0".   a. What is the character of Anton's gain or loss on the sale if he uses the regular MACRS system and the building is an apartment building? Assume the accumulated depreciation at the time of the sale is $208,990.   The total gain would be _____, of which ______is Section 1250 recapture and_______is unrecaptured Section 1250. Any balance is considered a long-term capital gain   .   b. What is the character of Anton's gain or loss on the sale if he uses the regular MACRS system and the building is an office building? Assume the accumulated depreciation at the time of the sale is $147,384.   The total gain would be_____, of which _____ is Section 1250 recapture and ______ is unrecaptured Section 1250. Any balance is considered Section 1231 gain

Six years ago, Donna purchased land as an investment. The land cost $150,000 and is now worth $480,000. Donna plans to transfer the land to Development Corporation, which will subdivide it and sell individual tracts. Development's income on the land sales will be ordinary in character. Read the requirements. Requirement a. What are the tax consequences of the asset transfer and land sales if Donna contributes the land to Development in exchange for all its stock? on the transfer of land to Development Corporation. Donna recognizes no gain or loss Development's basis in the land will be $ 150,000. All gain on the subsequent sales will be to Development. This alternative results in the pre-contribution gain post-contribution profit earned from subdividing the land ordinary income that accrued prior to Donna's transfer and the being taxed at a 21% tax rate. Requirement b. In what alternative ways can the transaction be structured to achieve more favorable tax results? Assume Donna's…