Will the gain resulting from the involuntary conversion

Assignment Help Cost Accounting
Reference no: EM13163282

Betty, whose tax rate is 33%, is in the business of breeding and racing horses. Except for the transactions below, she has no other sales or exchanges and she has no unrecaptured net Sec. 1231 losses. Consider the following transactions that occur during the year:

• A building with an adjusted basis of $300,000 is destroyed by fire. Insurance proceeds of $500,000 are received, but Betty does not plan to replace the building. The building was built 12 years ago at a cost of $430,000 and used to provide lodging for her employees. Straight-line depreciation has been used.

• Four acres of the farm are condemned by the state to widen the highway and Betty receives $50,000. The land was inherited from her mother 15 years ago when its FMV was $15,000. Her mother purchased the land for $10,300. Betty does not plan to purchase additional land.

• A racehorse purchased four years ago for $200,000 was sold for $550,000. Total depreciation allowed using the straight-line method amounts to $160,000.

• Equipment purchased three years ago for $200,000 is exchanged for $100,000 of IBM common stock. The adjusted basis of the equipment is $120,000. If straight-line depreciation had been used, the adjusted basis would be $152,000.

• An uninsured pony with an adjusted basis of $20,000 and FMV of $35,000, which her daughter uses only for personal use, is injured while attempting a jump. Because of the injury, the uninsured pony has to be destroyed by a veterinarian.

Task(s): a. What amount of Sec. 1245 ordinary income must be recognized?

b. What amount of Sec. 1250 ordinary income must be recognized? 25, 000

c. Will the loss resulting from the destruction of her daughter's pony be used to determine net Sec. 1231 gains or losses? Yes it can be determined

d. What is the amount of the net Sec. 1231 gain or loss? Loss of 1600

e. After all of the netting of gains or losses is completed, will the gain resulting from the involuntary conversion of the building be treated as LTCG?

f. What is the amount of her unrecaptured Sec. 1250 gain?

Reference no: EM13163282

Questions Cloud

Design static method below to find and return complex number : Given a "Complex" class with all the standard methods for complex numbers, design the static method below to find and return the smallest complex number.
Calculate the density and specific gravity of the object : An object made of aluminum has a mass of 8.37g. When it was placed in a graduated cylinder containing 20.0mL of water, the water level rose to 23.1mL. Calculate the density and specific gravity of the object.
Explain the density of rhombic sulfur : The numbers above are also the only numbers I am given. I do not have delta G's of molar G's. If you have an answer that solves for the G's and shows me step by step how to solve the problem, you will get five stars.
How many molecules are in the graduated cylinder : A graduated cylinder contains 10.0ml of water. If the volume of a single water molecule is 2.99 x 10e-23 cm e3, how many molecules are in the graduated cylinder?
Will the gain resulting from the involuntary conversion : What amount of Sec. 1250 ordinary income must be recognized and will the loss resulting from the destruction of her daughter's pony be used to determine net Sec. 1231 gains or losses? Yes it can be determined
The student did not preheat the gravity filtration apparatus : The student did not pre-heat the gravity filtration apparatus in Part 3. c) The student forgot to cool 5 mL of solvent in Part 5 and washed the crystals with room-temperature solvent.
How is a charge different from a mortgage : How is a "charge" different from a mortgage?
Explain the significance of the chromic acid test : Explain the significance of the chromic acid test. What would you observe in the case of a positive result? Do you expect 9-fluorenol to give a positive or negative result? What about the 9-fluorenone?
Explain rnase is an enzyme that cleaves : RNAse is an enzyme that cleaves the P-O5\' bond in RNA. It has two His residues in the active site. Suggest a plausible explanation

Reviews

Write a Review

 

Cost Accounting Questions & Answers

  Product in inventory at the starting of the year

The company's net income for the year was $12,000 higher under variable costing than below absorption costing. Specified these facts, Find the number of units of product in inventory at the starting of the year

  Evaluate the value of one share of gis stock

Evaluate the value of one share of GIS stock using Dividends Valuation Approach.

  What is the cost driver to be used as allocation base

Explain the customer level cost and where would that cost fall in customer cost hierarchy - what is the cost driver to be used as allocation base?

  Match each situation with fraud triangle

Match each situation with fraud triangle factor that best explain it an employee's monthly credit card payments are nearly 75 percent of their monthly earnings

  Corporate governance

You are to reflect on how this case of China Sky relates to what the arguments for and against allowing audit firm partners and/or employees to join audit committees.

  Evaluate the machine capability

Evaluate the machine capability

  Financial statements or footnotes

Give any audit steps that Rekdahl should conduct to evaluate if the company is in compliance with the bond indentures and show any reporting requirements that financial statements or footnotes should include.

  What would be the budgeted production for march

What would be the effect on income from operations if absorption costing is used rather than variable costing and What would be the budgeted production for March

  Absorption costing income statement

BT's absorption costing Income Statement for the month ended and reconcile and explain the difference between BT's Variable and Absorption Net Operating Income.

  What if we simply bartered for all

What if we simply bartered for all? Would our economy grow - with that said, is pursuit of ALL self interest in a contract unethical and if not, at what point does it become unethical?

  Evaluate the slope and the cost

Evaluate the slope then explain what it means in terms of the rate of change of the dependent variable per unit change in the independent variable.

  Determine approximate activity cost driver rates

Evaluate approximate Activity Cost Driver Rates (ACDR) for the drivers you have chosen.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd