Question

1.. Kishan exchanged office building for land. Building orginal cost 45000 and adjusted value 20000. Land had fair market value of 40000 and also Kishan gave 4000 in transaction. What is the basis of land after exchange?

2. Asha purchased super computer for 3,000,000 (5 Year property) on sept 27. with MACRS Section 1, what Asha's maximum cost recovery for this year?

3. This year Mike sold business equipment for 100,000. Mike bought that twp years ago for 90000 and claimed 25000 depreciation expenses. in the past five years Mike reported 14000 section 1231 loss. what is the amount of gain or loss?

Answer 1

I'VE ANSWERED 1ST TWO QUESTIONS. KINDLY POST ONE QUESTION AT A TIME. THANK YOU!

Q#1)

Basis of land after exchange :

Adjusted value of building	20000
Add. Cash paid	4000
Basis of land	24000

Exchange of an asset for another asset plus cash, tax basis of the acquired item

= Tax basis of the old exchanged item + Boot(cash paid)

Q#2)

Asha's maximum cost recovery for this year:

=3000000x20%(Half yr convention;5 yr property;1st yr rate)

=$600000

ANY DOUBTS OR CORRECTIONS?

JUST LEAVE A COMMENT BELOW

THANK YOU!