Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Chapter 8, Problem 16MCQ
To determine
Introduction:Section 1231 assets are depreciable assets held by a business for more than one year, the gain on sale of these assets are taxed at the lower of
To choose:The correct answer to determine the amount of gain is taxed at 28.8 percent, assuming J is in highest tax bracket for ordinary income and the Medicare tax on net investment is applicable.
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Chapter 8 Solutions
Income Tax Fundamentals 2020
Ch. 8 - Alice purchases a rental house on August 22,2019,...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - James purchased office equipment for his business....Ch. 8 - Which of the following statements with respect to...Ch. 8 - Which of the following is not true about the MACRS...Ch. 8 - On July 20,2019, Kelli purchases office equipment...Ch. 8 - Which of the following is not considered a limit...Ch. 8 - In 2019, Ben purchases and places in service a new...Ch. 8 - In 2019, Ben purchases and places in service a new...
Ch. 8 - Prob. 11MCQCh. 8 - Prob. 12MCQCh. 8 - Prob. 13MCQCh. 8 - In 2019, Mary sells for $24,000 a machine used in...Ch. 8 - Prob. 15MCQCh. 8 - Prob. 16MCQCh. 8 - Virginia has business property that is stolen and...Ch. 8 - Pat sells land for $25,000 cash and a $75,000...Ch. 8 - Prob. 19MCQCh. 8 - Prob. 20MCQCh. 8 - Oscar owns a building that is destroyed in a...Ch. 8 - Prob. 22MCQCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - 3. Mike purchases a new heavy-duty truck (5-year...Ch. 8 - On March 8,2019, Holly purchased a residential...Ch. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Calculate the following: The first year of...Ch. 8 - During 2019, William purchases the following...Ch. 8 - On February 2,2019, Alexandra purchases a personal...Ch. 8 - On September 14,2019, Jay purchased a passenger...Ch. 8 - Tom has a successful business with $100,000 of...Ch. 8 - Prob. 14PCh. 8 - Annie develops a successful tax practice. She...Ch. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21P
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- Chelsea, who is single, purchases land for investment purposes in 2014 at a cost of 22,000. In 2019, she sells the land for 38,000. Chelseas taxable income without considering the land sale is 100,000. What is the effect of the sale of the land on her taxable income, and what is her tax liability?arrow_forwardTom has a successful business with $100,000 of taxable income before the election to expense in 2019. He purchases one new asset in 2019, a new machine which is 7 -year MACRS property and costs $25,000. If you are Tom's tax advisor, how would you advise Tom to treat the purchase for tax purposes in 2019? Why? ______________________________________________________________________________ ______________________________________________________________________________arrow_forwardOn June 30, 2019, Kelly sold property for 240,000 cash and a 960,000 note due on September 30, 2020. The note will also pay 6% interest, which is slightly higher than the Federal rate. Kellys cost of the property was 400,000. She is concerned that Congress may increase the tax rate that will apply when the note is collected. Kellys after-tax rate of return on investments is 6%. a. What can Kelly do to avoid the expected higher tax rate? b. Assuming that Kellys marginal combined Federal and state tax rate is 25% in 2019, how much would the tax rates need to increase to make the option identified in part (a) advisable?arrow_forward
- Joanne is in the 24% tax bracket and owns depreciable business equipment that she purchased several years ago for 135,000. She has taken 100,000 of depreciation on the equipment, and it is worth 55,000. Joannes niece, Susan, is starting a new business and is short of cash. Susan has asked Joanne to gift the equipment to her so that Susan can use it in her business. Joanne no longer needs the equipment. Identify the alternatives available to Joanne if she wants to help Susan and the tax effects of those alternatives. (Assume that all alternatives involve the business equipment in one way or another, and ignore the gift tax.)arrow_forwardNicky 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?arrow_forwardLeroy and Amanda are married and have three dependent children. During the current year, they have the following income and expenses: Salaries 120,000 Interest income 45,000 Royalty income 27,000 Deductions for AGI 3,000 Deductions from AGI 9,000 a. What is Leroy and Amandas current year taxable income and income tax liability? b. Leroy and Amanda would like to lower their income tax. How much income tax will they save if they validly transfer 5,000 of the interest income to each of their children? Assume that the children have no other income and that they are entitled to a 1,050 standard deduction.arrow_forward
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