Question

Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2014. The assets of the business are as follows:
Rod and Agnes agree that $50,000 of the purchase price is for Agnes's five-year covenant not to compete.
a. Calculate Agnes's realized and recognized gain.
b. Determine Rod's basis for each of the assets.
c. Write a letter to Rod informing him of the tax consequences of the purchase. His address is 300 Riverview Drive, Delaware, OH 43015.


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  • CreatedMay 25, 2015
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