Calculate agnes realized and recognized gain

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Problem - Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2019. The assets of the business are:

Asset

Agnes's Adjusted Basis

FMV

Accounts receivable

$ 70,000

$ 70,000

Inventory

90,000

100,000

Equipment

150,000

160,000

Furniture and fixtures

95,000

130,000

Building

190,000

250,000

Land

25,000

75,000

Total

$620,000

$785,000

Required -

a. Calculate Agnes's realized and recognized gain.

b. Determine Rod's basis for each of the assets.

c. Write a letter to Rod informing him of the tax consequences of the purchase. His address is 300 Riverview Drive, Delaware, OH 43015.

Reference no: EM132659876

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