Authority and reasoning responses, Taxation

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Please explain all of your responses; include authority and reasoning.  Do not just answer a question "yes" or "no."  Do not just provide a numerical answer without explaining how you derived it.  Please place your name on the top of each page of your exam.

Your responses to this should be both e-mailed to me and uploaded in Doc Sharing in e-College.  Make sure to bubble "Instructor Only" when uploading.

1.   On April 2, Lana executed a contract to sell her office building to Swanky Realty, Inc. for $1,000,000.  The transaction was to close on September 1.  Lana's basis in the building is $300,000.  On July 1, Lana deeded the building to her son Turner.  Between July 1 and September 1, Turner collected the $180,000 rent paid by the building tenants.  At the closing on September 1, Swanky Realty paid the $1,000,000 purchase price to Turner.  How much income must Lana and Turner each recognize?

 


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