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Business Accounting CONCEPTS IN FED.TAX.,2020-W/ACCESS

a. Introduction: Realized gain or loss refers to the profit or loss that is being generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates a gain and if the selling price/realized value is less than the purchase price then, it generates a loss. To Compute: The gain or loss realized by G on condemnation. G realizes a gain on condemnation of $210,000. Amount realized = $430,000 Adjusted basis = $220,000 Computation of gain or loss realized by G on the condemnation is as below: Gain or loss on condemnation=Amount realized-Purchase price/adjusted basis =$430,000-$220,000 =$210,000 Thus, G realizes the gain of $210,000 on condemnation. b. Introduction: Realized gain or loss refers to the profit or loss that is being generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates profit and if the selling price/realized value is less than the purchase price then, it generates a loss. To determine: The minimum amount of gain that G must recognize on the condemnation. G generates the gain of $210,000 on condemnation but G is not recognizing its gain on condemnation proceeds of $430,000 because the whole amount is being reinvested for purchasing a new warehouse for $670,000. However, if G wants to recognize its gain then, G must deferred the realized gain of minimum $210,000. c. Introduction: Realized gain or loss refers to the profit or loss that is being generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates profit and if the selling price/realized value is less than the purchase price then, it generates a loss. To determine: The basis in the new warehouse, if G opts to recognize the minimum amount of gain realized on condemnation. The basis in new warehouse, if G opts to recognize the minimum amount of gain realized on condemnation is $460,000. Cost of new warehouse = $670,000 Gain realized on condemnation = $210,000 Computation of basis in the new warehouse, if G opts to recognize the minimum amount of gain realized on the condemnation is as below: Basis of new warehouse=Cost of new warehouse- Deferred gain on condemnation =$670,000-$210,000 =$460,000 Thus, the basis in the new warehouse, if G opts to recognize minimum gain on condemnation is $460,000. This is same as total of value of old warehouse i.e. $220,000 and additional amount invested by G for purchasing replacement warehouse i.e. $240,000 ($670,000-$430,000).

a. Introduction: Realized gain or loss refers to the profit or loss that is being generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates a gain and if the selling price/realized value is less than the purchase price then, it generates a loss. To Compute: The gain or loss realized by G on condemnation. G realizes a gain on condemnation of $210,000. Amount realized = $430,000 Adjusted basis = $220,000 Computation of gain or loss realized by G on the condemnation is as below: Gain or loss on condemnation=Amount realized-Purchase price/adjusted basis =$430,000-$220,000 =$210,000 Thus, G realizes the gain of $210,000 on condemnation. b. Introduction: Realized gain or loss refers to the profit or loss that is being generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates profit and if the selling price/realized value is less than the purchase price then, it generates a loss. To determine: The minimum amount of gain that G must recognize on the condemnation. G generates the gain of $210,000 on condemnation but G is not recognizing its gain on condemnation proceeds of $430,000 because the whole amount is being reinvested for purchasing a new warehouse for $670,000. However, if G wants to recognize its gain then, G must deferred the realized gain of minimum $210,000. c. Introduction: Realized gain or loss refers to the profit or loss that is being generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates profit and if the selling price/realized value is less than the purchase price then, it generates a loss. To determine: The basis in the new warehouse, if G opts to recognize the minimum amount of gain realized on condemnation. The basis in new warehouse, if G opts to recognize the minimum amount of gain realized on condemnation is $460,000. Cost of new warehouse = $670,000 Gain realized on condemnation = $210,000 Computation of basis in the new warehouse, if G opts to recognize the minimum amount of gain realized on the condemnation is as below: Basis of new warehouse=Cost of new warehouse- Deferred gain on condemnation =$670,000-$210,000 =$460,000 Thus, the basis in the new warehouse, if G opts to recognize minimum gain on condemnation is $460,000. This is same as total of value of old warehouse i.e. $220,000 and additional amount invested by G for purchasing replacement warehouse i.e. $240,000 ($670,000-$430,000).

Solution Summary: The author explains that realized gain or loss is generated by selling or disposing of any asset. If the selling price/realized value is more than the purchase price then, it generates a gain.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN: 9780357110362

Author: Murphy

Publisher: CENGAGE L

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Chapter 12 Solutions

CONCEPTS IN FED.TAX.,2020-W/ACCESS

Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 19P Ch. 12 - Prob. 20P Ch. 12 - Prob. 21P Ch. 12 - Prob. 22P Ch. 12 - Prob. 23P Ch. 12 - Prob. 24P Ch. 12 - Prob. 27P Ch. 12 - Prob. 30P Ch. 12 - Prob. 33P

Ch. 12 - Prob. 34P Ch. 12 - Prob. 35P

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