Reference no: EM13224537
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?
c. Will the loss resulting from the destruction of her daughter's pony be used to determine net Sec. 1231 gains or losses?
d. What is the amount of the net Sec. 1231 gain or loss?
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?
|
Define the structure of propanoic acid
: Draw the structure of propanoic acid (propionic acid) with the approiate hydrogen bonded water molecules -- that is, put in the maximum number of water molecules that could H bond with propionic acid. Remember -- H bonds (hydrogen bonds) are indic..
|
|
Compare and contrast the different types of drawings
: Compare and contrast the different types of drawings and discuss their importance to an effective and efficient construction process. Support the paper with research from the online course material, text, and outside sources if necessary.
|
|
Introductory concepts
: To complete this assignment you must choose a listening selection from Section 1: Basic Musical Concepts (any of the classes from "Unity and Variety" up to and including "Folk Music, Art Music, and All That Jazz"), and write a two-paragraph summary. ..
|
|
Explain a compound contains only carbon and hydrogen
: A compound contains only carbon, hydrogen, and oxygen. Combustion of 138.7 g of the compound yields 203.3 g of CO2 and 83.23 g of H2O.
|
|
What is the amount of her unrecaptured sec 1250 gain
: 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.
|
|
How changes in various economic factors affect the u.s.
: Briefly explain how changes in various economic factors affect the U.S. current account balance.
|
|
What did wal-mart learn from its experiences in mexico
: What did Wal-Mart learn from its experiences in Mexico? How, if at all, did Wal-Mart apply those lessons to its expansion in Europe and China?
|
|
Explain the legal positions and legal obligations
: Explain the legal positions and legal obligations of each of the parties. Would it make any difference to know that almost all the editors and production designers at McGraw-Hill did freelance work?
|
|
In light of european rivalries during the colonial period
: In light of the European rivalries during the colonial period, and considering the various areas exploried, settled, or claimed by the various European nations, what issues existed for conflict among them?
|