DM Inc. incurred a $25,000 net capital loss in 2014 that has carried forward into 2015. During 2015, a hurricane destroyed business assets with a $120,000 basis. DM received a $150,000 insurance reimbursement which it immediately used to purchase replacement assets. The new assets have a three-year MACRS recovery period. Should DM elect to defer the gain recognized on the involuntary conversion?
Answer to relevant QuestionsCroyden is a calendar year, accrual basis corporation. Mr. and Mrs. Croyden (cash basis taxpayers) are the sole corporate shareholders. Mr. Croyden is president and Mrs. Croyden is vice president of the corporation. ...Four years ago, Mr. Bates purchased 1,000 shares of UPF Inc. for $10,000. These shares represent a 30 percent equity interest in UPF, which is an S corporation. This year, UPF defaulted on a $120,000 unsecured debt to a ...Why are certain items of income, gain, deduction, or loss separately stated on a partnership or an S corporation tax return? Refer to the facts in the preceding problem. Mr. T is a 10 percent general partner in KLMN. During the year, he received a $1,000 cash distribution from KLMN. a. Compute Mr. T’s share of partnership ordinary income and ...At the beginning of 2015, Ms. P purchased a 20 percent interest in PPY Partnership for $20,000. Ms. P’s Schedule K-1 reported that her share of PPY’s debt at year-end was $12,000 and her share of ordinary loss was ...
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