Harry purchased equipment for his business and gave the seller cash and a note due in two years. Carrie also purchased business equipment, but financed the transaction with a bank loan. Because both Harry and Carrie were having financial difficulties, the creditors reduced the balance due on each mortgage by $50,000. What are the Federal income tax effects of the debt adjustments experienced by Harry and Carrie?
Answer to relevant QuestionsDuring the year, Olivia recorded the following transactions involving capital assets. Gain on the sale of unimproved land (held as an investment for 4 years)......$ 4,000 Loss on the sale of a camper (purchased 2 years ago ...The Bluejay Apartments, a new development, is in the process of structuring its lease agreements. The company would like to set the damage deposits high enough that tenants will keep the apartments in good condition. The ...Brittany Callihan sold stock (basis of $184,000) to her son, Ridge, for $160,000, the fair market value. a. What are the tax consequences to Brittany? b. What are the tax consequences to Ridge if he later sells the stock for ...Juan, a sole proprietor, acquires a new 5-year class asset on March 14, 2014, for $200,000. This is the only asset Juan acquired during the year. He does not elect immediate expensing under § 179. Juan does not claim any ...John Johnson is considering acquiring an automobile at the beginning of 2014 that he will use 100% of the time as a taxi. The purchase price of the automobile is $35,000. John has heard of cost recovery limits on automobiles ...
Post your question