Question

JTF, Inc. a C corporation bought a building several years ago to use as a warehouse...

JTF, Inc. a C corporation bought a building several years ago to use as a warehouse in its business. It paid $20,000 in cash and assumed a $180,000 debt from the seller in connection with the purchase. Over the years, JTF correctly deducted $30,000 in straight line depreciation from the date the property was purchased through the date of sale. JTF sold the warehouse in the current year. The buyer paid JTF $50,000 in cash, took the property subject to the $180,000 debt, and also provided moving services to Taxpayer worth $7,000. Part 1) What portion of JTF, Inc.’s recognized gain or loss on the sale of the warehouse will be ordinary? Part 2) What if it was a piece of equipment used for the business?

A. $0

B. $6,000

C. $7,000

D. $30,000

E. $37,000

F. $67,000

G.None of the above

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

) Orrdinary gain/loss to be recognized is F. $67000 as the liabilities assumed are same $180000, the diffference in cash is $30000 apart from that JTF has claimed a depreciation of $30000 over the years and hence the book value of the property is less than $30000 now and the value of services provided to the taxpayers is $7000.

So, the gain to be recognized is $30000 + $30000 + $7000 = $67000

2) If it was an equipment used for the business then also the treatment would have been the same.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Taxpayer, Inc. (a C corporation) bought a building several years ago to use as a warehouse...
Taxpayer, Inc. (a C corporation) bought a building several years ago to use as a warehouse in its business. It paid $20,000 in cash and assumed a $180,000 debt from the seller in connection with the purchase. Over the years, Taxpayer (properly) deducted $30,000 in straight line depreciation from the date the property was purchased through the date of sale. Taxpayer sold the warehouse in the current year. The buyer paid Taxpayer $50,000 in cash, took the property subject to...
(a) Nina, Inc. originally purchased a trade/business building several years ago for $750,000. The accumulated depreciation...
(a) Nina, Inc. originally purchased a trade/business building several years ago for $750,000. The accumulated depreciation (straight-line) on the building is $450,000. Nina, Inc. sells the building for $1,000,000. What is the gain on the sale and what type of gain is it? (b) Using the example above, assume Nina, Inc. is a sole proprietorship. What is the character of the recognized gain that Nina, Inc. reports on the sale of the trade/business building? What amount of tax will Nina,...
Mr. Smith's business warehouse was demolished by a tornado on August 10, 2018. On November 14,...
Mr. Smith's business warehouse was demolished by a tornado on August 10, 2018. On November 14, 2018, Mr. Smith received $90,000.00 in insurance proceeds covering the damage to the warehouse. Mr. Smith’s basis in the warehouse was $50,000.00. He purchased a new warehouse on February 5, 2019 for $70,000.00. 12. What is the latest date for Mr. Smith to make an election under $1033 and defer recognition of the gain? a.. December 31, 2020 b. November 10, 2009 c. December...
3. Randall owns all the stock of SilverLane, Inc., a C corporation for which his adjusted...
3. Randall owns all the stock of SilverLane, Inc., a C corporation for which his adjusted basis is $225,000. Randall founded SilverLane 12 years ago. The assets and liabilities of SilverLane are recorded as follows. Assets Basis FMV Cash $ 15,000 $ 15,000 Accounts receivable –0– 25,000 Inventory 30,000 35,000 Machinery and equipment* 70,000 90,000 Land 60,000 150,000 $175,000 $315,000 Liabilities Basis FMV Accounts payable $ 5,000 $ 5,000 Notes payable 10,000 10,000 $15,000 $15,000 ? *Accumulated depreciation of $55,000...
Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition,...
Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition, Trail has a net capital loss of $30,000. Trail's taxable income is $50,000 $20,000 $140,000 $60,000 Burt and Tiffany form Owl Corporation. Burt transfers property (basis of $20,000 and fair market value of $130,000), while Tiffany agrees to serve as Owl’s manager for one year. Each receives 100 shares of Owl Corporation stock. The value of Tiffany’s services for one year is $130,000. Which...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In September of this year, when the home had a fair market value of $620,000 and he owed $550,000 on the mortgage, he took out a home equity loan for $80,000. Will used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest? a. $70,000. b. $80,000. c....
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
SPRING TRAINING INC.   Balance Sheet                             December 31, 2017 ASSETS  &nb
SPRING TRAINING INC.   Balance Sheet                             December 31, 2017 ASSETS                                                         LIABILITIES Cash                              $25,000             Accounts Payable                 $50,000 Accounts Rec.                   5,000             Mortgage Payable                 50,000 Inventory                        14,000               Supplies                            2,000             Total Liabilities                                  $100,000 Land                                18,000 Buildings      $220,000                             STOCKHOLDER EQUITY     Acc. Depr. <20,000> 200,000           Equipment     200,000                             Common Stock $5 Par      $30,000     Acc. Depr <14,000> 186,000             Excess of Par                     $300,000                                                                   Retained Earnings               20,000                                                                    Total Equity                                     $350,000 TOTAL ASSETS        $450,000              TOTAL LIAB. & EQUITY        ...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange for stock, Marlene and Nancy contributed appreciated property, while Olive contributed services. The exchanges of Marlene and Nancy will be nontaxable if: Olive receives 30% of the stock Olive receives 80% of the stock Olive receives 15% of the stock Marlene and Nancy together receive 50% of the stock In June of 2018, Alice acquired her only machine for $30,000 to use in her...
1. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck....
1. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck. The truck is expected to have a $2,500 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount? 2. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $22,000 for the truck. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT