Question

7. Koch traded machine 1 for machine 2. Koch originally purchased machine 1 for $75,500 and...

7. Koch traded machine 1 for machine 2. Koch originally purchased machine 1 for $75,500 and machine 1's adjusted basis was $40,250 at the time of the exchange. Machine 2's seller purchased it for $64,750 and machine 2's adjusted basis was $55,250 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

MULTIPLE CHOICE

$40,250

$49,750

$55,250

$75,500

None of the choices are correct

8. Butte sold a machine to a machine dealer for $51,000. Butte bought the machine for $54,000 several years ago and has claimed $12,000 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

MULTIPLE CHOICE

$9,000 1231 loss

$3,000 1231 loss

$9,000 ordinary gain

$9,000 capital gain

None of the choices are correct

9. Sadie sold 10 shares of stock to her brother, George, for $680 six months ago. Sadie had purchased the stock for $960 two years earlier. If George sells the stock for $1,240 six months later, what is the amount and character of his recognized gain or loss in the current year?

MULTIPLE CHOICE

$0

$280 SHORT TERM CAPITAL GAIN

$280 long term capital gain

$560 short term capital gain

None of the choices are correct

Homework Answers

Answer #1

1. Answer : Option A , $ 40,250

Explanation;

The exchange qualifies as a like-kind exchange since no boot was transferred, Koch basis in the new machine is the basis in its old machine.

2. Answer : Option C , $9,000 Ordinary Gain.

Explanation;  

$54,000 - $51,000 = $3000 Batte's Gain or Loss = $12,000 - $3000 = $9,000 $9,000 Ordinary Gain

3. Answer : Option $280 Long Term Capital Gain

Explanation ;

Sadies loss of $280 is deferred and her brother receives a dual basis in the stock. If he sells the stock at a gain , he receives a $960 carryover basis from Sadie. If he sells the stock at a loss he revives $680 cost basis in the stock. Sadies basis and holding period are transferred to George, so he receives a $280 ($1,240 - $960) long term capital gain on the sales.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Butte sold a machine to a machine dealer for $51,900. Butte bought the machine for $53,100...
Butte sold a machine to a machine dealer for $51,900. Butte bought the machine for $53,100 several years ago and has claimed $11,550 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss? Multiple Choice $10,350 §1231 loss. $1,200 §1231 loss. $10,350 ordinary gain. $10,350 capital gain. None of the choices are correct.
4. Daschle LLC completed some research and development during June of the current year. The related...
4. Daschle LLC completed some research and development during June of the current year. The related costs were $73,800. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year? MULTIPLE CHOICE $0 $7,995 $8,610 $14,760 None of the choices are correct 5. Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July 15th and the purchase...
Sadie sold 10 shares of stock to her brother, George, for $560 16 months ago. Sadie...
Sadie sold 10 shares of stock to her brother, George, for $560 16 months ago. Sadie had purchased the stock for $720 two years earlier. If George sells the stock for $880, what are the amount and character of his recognized gain or loss in the current year? None of the choices are correct. $320 short-term capital gain. $160 long-term capital gain. $160 short-term capital gain.
Metro Corp. traded machine A for machine B. Metro originally purchased machine A for $50,000 and...
Metro Corp. traded machine A for machine B. Metro originally purchased machine A for $50,000 and machine A's adjusted basis was $25, 000 at the time of the exchange. The fair market value of machine A is $44,000 and Metro trades machine A for machine B valued at $40,000 and $4,000 cash. Machine A and machine B are like-kind property. The exchange qualifies as a like-kind exchange. What is Metro's recognized gain or loss?
Metro Corp. traded Land A for Land B. Metro originally purchased Land A for $50,000 and...
Metro Corp. traded Land A for Land B. Metro originally purchased Land A for $50,000 and Land A’s adjusted basis was $25,000 at the time of the exchange. What is Metro’s realized gain or loss, recognized gain or loss, and adjusted basis in Land B in each of the following alternative scenarios? Problem 11-60 Part-c c. The fair market value of Land A is $35,000 and Land B is valued at $40,000. Metro exchanges Land A and $5,000 cash for...
1. Apple LLC owns equipment with a $250,000 adjusted basis which was purchased on 3/14/2015 for...
1. Apple LLC owns equipment with a $250,000 adjusted basis which was purchased on 3/14/2015 for $435,000. Determine the amount and character of Apple LLC's gain or loss if the equipment was sold on 4/1/2017 with proceeds of: (a) $375,000, (b) $525,000, (c) $220,000. 2. Brunswick LLC purchased manufacturing equipment on 5/19/2015 for $600,000. Brunswick has taken depreciation of $330,000 on the equipment and it has an adjusted basis of $270,000 when it is sold on 2/15/2017 for $450,000. (a)....
2. Ford purchased material handling equipment for its Fusion (car) assembly line on November 19, 2018...
2. Ford purchased material handling equipment for its Fusion (car) assembly line on November 19, 2018 for $45,000. It later sold the equipment on April 15, 2020 after posting a $1,000 advertisement in a manufacturing magazine with the details on the equipment for sale. The buyer paid $27,000 in cash for the handling equipment. Assume the depreciation able to be claimed for the equipment was $4,000, $6,000, and $6,000 in 2018, 2019, and 2020, respectively. Further, assume the company had...
1. Beth's business purchased only one asset during the current year (a full 12-month tax year)....
1. Beth's business purchased only one asset during the current year (a full 12-month tax year). Beth placed in service machinery (7-year property) on December 1 with a basis of $65,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2) MULTIPLE CHOICE $2,321 $3,250 $9,289 $13,000 None of the choices are correct. 2. Tom Tom LLC purchased a rental house and land during the current year for $152,000. The purchase price was allocated as follows:...
4- On January 1, X9, Gerald received his 50 percent profits and capital interest in High...
4- On January 1, X9, Gerald received his 50 percent profits and capital interest in High Air, LLC, in exchange for $3,200 in cash and real property with a $4,200 tax basis secured by a $3,200 nonrecourse mortgage. High Air reported a $16,200 loss for its X9 calendar year. How much loss can Gerald deduct, and how much loss must he suspend if he only applies the tax basis loss limitation? Multiple Choice $0, $16,200. None of the choices are...
Corona Industries purchased a stamping machine on January 2, 2018, for $100,000. It made an initial...
Corona Industries purchased a stamping machine on January 2, 2018, for $100,000. It made an initial payment of $20,000 and financed the balance over 5 years at State Bank. The loan terms were for annual payments of $16,000 plus 10% interest, payable on December 31 each year. The year 2021 proves to be a difficult year and on December 1, 2021 Corona negotiates a debt restructuring with State Bank. The settlement calls for cash payment of accrued interest plus $4,000...