Alex buys land for use in his business for $60 on January 1, 2010. He pays $2/year
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2- Chris buys a building on January 1, 2010 for $3.9 million. The building is subject to straight-line 39 year depreciation. He sells the building on December 31, 2013 for $4 million. What is Chris' gain or loss on the sale?
3- Frank buys land for $60 in 2010. He gives a gift of the land to Gail in 2012. The land was worth $50 at the time of the gift. Gail sells the land to Heath in 2014 for $75. What is Gail's gain or loss on the sale?
4- Larry buys a building in 2005 for $14 million. He pays cash of $1 million and takes out a mortgage for $13 million. From 2005-2012, he claims $8 million of depreciation on the building. In 2013, when the building is worth $5 million, Larry is in default on the mortgage payments and the building is foreclosed on by the bank. What is Larry's gain or loss in 2013?
5- Mike buys land and a piece of machinery on July 1, 2005 for $10 million. He allocates $6 million to the land and $4 million to the machinery. Assume 10 year straight-line depreciation for the machinery. On July 1, 2013, he sells the machinery to Nate for $3 million. Around that same time, the IRS reallocates the purchase price as $5 million to the land and $5 million to the machinery. What is Mike's gain or loss on the sale?
6- Tom buys land for $100 on January 1, 2005 and sells the land to Ursula on July 1, 2010 for $120. Ursula gives a gift of the land to Victor on January 1, 2012 when the land is worth $110. Victor sells the land to Wendy on July 1, 2014 for $105. What is Victor's gain or loss on the sale?
7- Edward buys Apple stock at three different times - 10 shares on January 1, 2010 for $300 total, 20 shares on July 1, 2012 for $900 total, and 10 shares on January 1, 2013 for $600 total. He sells 15 shares on July 1, 2014 for $1,800. He is able to separately identify all of his shares. He wants to pay the least amount of tax on his 2014 return. What gain should he report?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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