South-western Federal Taxation 2018: Individual Income Taxes
41st Edition
ISBN: 9781337385886
Author: William H. Hoffman, James C. Young, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 34CE
To determine
Determine, the amount of gain, M gets because of the cancellation of the note.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Farhad canceled a note issued by Emma (Farhad's niece) that arose in connection with the sale of property. At the time of the
cancellation, the note had a basis to Farhad of $277,400, a face amount of $499,320, and a fair market value of $374,490.
Presuming that the initial sale by Farhad qualified as an installment sale, how much gain does the cancellation result in for
Farhad?
13,000 X
A buyer purchases property for $45,000 in cash and assumes the seller's outstanding mortgage balance of $98,500. The lender executes a release for the seller. The
buyer fails to make any mortgage payments, and the lender forecloses. At the foreclosure sale, the property is sold for $75,000. Based on these facts, unless state
law provides anti-deficiency protection, who is liable, and for what amount?
The seller is solely liable for $23,500.
The buyer is solely liable for $23,500.
The buyer and the seller are equally liable for $23,500.
The buyer is solely liable for $30,000
Frank's Mini Mart sold a piece of equipment on an installment agreement, to a competitor on the other side of town. The other owner failed to make the payments and Frank had to repossess the equipment. What is Frank's gain or loss on repossessed personal property with a fair market value of $12,000 on the date of repossession, where the seller's basis in the installment obligation at the time of repossession is $7,500, and the costs of repossession were $500?
(a) Loss of $500.
(b) Gain of $4,000.
(c) Gain of $4,500
(d) Gain of $5,000.
Chapter 18 Solutions
South-western Federal Taxation 2018: Individual Income Taxes
Ch. 18 - Prob. 1DQCh. 18 - Prob. 2DQCh. 18 - Prob. 3DQCh. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 7DQCh. 18 - Prob. 8DQCh. 18 - Prob. 9DQCh. 18 - Prob. 10DQCh. 18 - Prob. 12DQ
Ch. 18 - LO.2 Emerald Motors is an automobile dealer. The...Ch. 18 - Prob. 14DQCh. 18 - Prob. 15DQCh. 18 - Prob. 16DQCh. 18 - Prob. 17DQCh. 18 - Prob. 18DQCh. 18 - LO.2, 5 What are the similarities between the crop...Ch. 18 - Prob. 20DQCh. 18 - Prob. 21DQCh. 18 - Prob. 22DQCh. 18 - LO.6 Largo Company is an engineering consulting...Ch. 18 - Prob. 24DQCh. 18 - Prob. 25DQCh. 18 - Prob. 26DQCh. 18 - Prob. 27CECh. 18 - Prob. 28CECh. 18 - Prob. 29CECh. 18 - Prob. 30CECh. 18 - Prob. 31CECh. 18 - Prob. 32CECh. 18 - Prob. 33CECh. 18 - Prob. 34CECh. 18 - Prob. 37CECh. 18 - Prob. 39PCh. 18 - Prob. 40PCh. 18 - Prob. 41PCh. 18 - Prob. 42PCh. 18 - Prob. 43PCh. 18 - Prob. 44PCh. 18 - Prob. 45PCh. 18 - Prob. 46PCh. 18 - Prob. 47PCh. 18 - Prob. 48PCh. 18 - Prob. 49PCh. 18 - Jeffrey Boyd, the president of Eagle Furniture...Ch. 18 - Floyd, a cash basis taxpayer, has received an...Ch. 18 - Prob. 52PCh. 18 - Prob. 53PCh. 18 - Prob. 54PCh. 18 - Prob. 55PCh. 18 - Prob. 56PCh. 18 - Prob. 57PCh. 18 - Prob. 58PCh. 18 - Ostrich Company makes gasoline storage tanks....Ch. 18 - Prob. 61PCh. 18 - Grouse Company is a furniture retailer whose...Ch. 18 - Lavender Manufacturing Company began business in...Ch. 18 - Silver Creek Ranch LLC is a small, family-owned...Ch. 18 - Prob. 65PCh. 18 - Prob. 66PCh. 18 - Prob. 67PCh. 18 - Prob. 68PCh. 18 - Ven Company is a retailer. In 2018, its before-tax...Ch. 18 - Prob. 1RPCh. 18 - Prob. 2RPCh. 18 - Prob. 4RPCh. 18 - Paula has sales that qualify to be reported on the...
Knowledge Booster
Similar questions
- Jessica sold goods to Stacy for $2,500 and retained a security interest in them. Two months later, Stacy filed a voluntary petition in bankruptcy. At this time, Stacy still owed Jessica $2,000 for the purchase price of the goods, the value of which was $1,500. a. May the trustee invalidate Jessica’s security interest? If so, under what provision? b. If the security interest is invalidated, what is Jessica’s status in the bankruptcy proceeding? c. If the security interest is not invalidated, what is Jessica’s status in the bankruptcy proceeding?arrow_forwardRafael sold an asset to Jamal. What is Rafael's amount realized on the sale in each of the following alternative scenarios? b. Rafael received $91,000 cash and was relieved of a $35,750 mortgage on the asset he sold to Jamal. Rafael also paid a commission of $9,400 on the transaction. Amount realizedarrow_forwardAfter Henri stopped making his mortgage payments, the lender foreclosed on his home and issued a Form 1099-A to him. The outstanding balance on the recourse loan was $86,000, and the fair market value of the property on the date of foreclosure was $80,000. What is Henri's realized amount from the foreclosure? A)$0 B)$80,000 C)$86,000 D)$166,000.arrow_forward
- Rafael sold an asset to Jamal. What is Rafael's amount realized on the sale in each of the following alternative scenarios? a. Rafael received $126,500 cash and a vehicle worth $15,900. Rafael also paid $8,850 in selling expenses. b. Rafael received $118,000 cash and was relieved of a $27,750 mortgage on the asset he sold to Jamal. Rafael also paid a commission of $6,600 on the transaction. Alan Meer inherits a hotel from his grandmother, Mary, on February 11 of the current year. Mary bought the hotel for $730,000 three years ago. Mary deducted $27,000 of cost recovery on the hotel before her death. The fair market value of the hotel in February is $725,000. (Assume that the alternative valuation date is not used.) a. What is Alan’s adjusted basis in the hotel?arrow_forwardDuring 2020, Jackie sent her brother Junnie $2,500 via a telegraphic transfer through El Banco Prieto. The bank’s remittance clerk made a mistake and credited Junnie with $250,000 which he promptly withdrew. The bank demanded the return of the mistakenly credited excess, but Junnie refused to do so. The BIR entered the picture and investigated Junnie. Would the BIR be correct if it determines that he earned a taxable income under the facts? No, it was not her fault that the funds in excess of $2,500 were credited to him. Yes, income is a taxable income regardless of the source No, he had no income because he had no right to the mistakenly credited funds. No, the funds in excess of $2,500 were in effect donated to her.arrow_forwardOn April 30, White sold land with a book value of $600,000 to Black for its fair value of $800,000. Black gave White a 12 percent, $800,000 note secured only by the land. At the date of sale, Black was in a very poor financial position and its continuation as a going concern was very questionable. white should...... a. Use the cost recovery method of accounting b. Record the note at its discounted value c. Record a $200,000 gain on the sale of the land d. Increase the allowance for uncollectibles for the full amount of the notearrow_forward
- On May 31, 2021, Joe's Car Lot sold Anthony a used car on account for $20,000. Joe's Car Lot uses the accrual method. In 2022, after $6,000 of payments had been made, Anthony filed for bankruptcy and Joe's Car Lot was notified that he could not expect to receive any of the amount owed to him. In 2023 final settlement was made and Joe's Car Lot received $7,000. How much bad debt loss can Joe's Car Lot deduct on his tax return in 2022? Options: a.) $3,000 b.) $0 c.) $14,000 d.) $7,000 e.) $6,000arrow_forwardO Sebastian originally sold his home in an installment sale for $300,000. At the time, his adjusted basis in the home was $220,000. He qualified for the Section 121 principal residence exclusion, so his gain was not included in his taxable income for the year of sale. Three years later, he repossessed the home from the buyer when the balance of the note was $275,000. He spent $8,000 on improvements and resold it within the year for $320,000. What is Sebastian's recomputed adjusted basis in the property? $228,000 $258,000 $278,000 $308,000arrow_forwardOn June 2, 2020, Sam's Auto Sales sold Jim a used car on account for $20,000. Sam's Auto Sales uses the accrual method. In 2021, when the balance due on the account was $6,000, Jim filed for bankruptcy. Sam was notified that he could not expect to receive any of the amount owed to him. In 2023 final settlement was made and Sam received $2,000. How much bad debt loss can Sam deduct on his tax return in 2021? options: a. $0 b. $6,000 c. $4,000 d. $12,000arrow_forward
- Verlin sells a commercial building and receives $50,000 in cash and a note for $60,000 at 10 percent interest. Verlin's adjusted basis in the building on the date of sale is $45,000 and he collects only the $50,000 down payment in the year of the sale. a. If Verlin elects to recognize the total gain on the property in the year of sale, calculate the taxable gain. b. Assuming Verlin uses the installment sale method, calculate the taxable gain he must report for the year of the sale. c. Assuming Verlin collects $10,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized under the installment sale method.arrow_forwardBrewster sold a rental house in 2019 for 90000 using an installment agreement and taking a lien on the property. his adjusted basis at the time of sale 70000. the buyer made a 5000 down payment and signed a mortgage secured by the property for the balance.using the installment method Brewster reported a gain of 1111 on his 2019 return. the buyer then failed to make any of the required payments and Brewster repossessed the property in March 2020. the cost of repossession was 500. what Brewster taxable gain on the repossession?a. 0b. 3889c. 18389d. 18889arrow_forwardBob entered into a land contract to purchase real estate from Sam. The purchase price was to be paid over a 10-year period by monthly amortization. At the end of five years, Bob defaulted, having failed to make his required payments. The contract provided that in the event of default, the seller could declare a forfeiture after a period of 30 days and repossess the property. If the court should consider the land contract an equitable mortgage, what might be the rights of Bob and Sam?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT