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In 2009, Jack purchased undeveloped oil and gas property for

In 2009, Jack purchased undeveloped oil and gas property for $900,000 and paid $170,000 for intangible drilling and development costs. He elected to expense the intangible drilling and development costs. During the current year he sells the property for $950,000

In 2009, Jack purchased undeveloped oil and gas property for $900,000 and paid $170,000 for intangible drilling and development costs. He elected to expense the intangible drilling and development costs. During the current year he sells the property for $950,000 when the property’s adjusted basis is $700,000. Depletion of $200,000 was allowed on the property.
a. What is the realized gain and how much of the gain is ordinary income?
b. For Jack to have a Sec. 1231 gain, the selling price must exceed what amount?

In 2009, Jack purchased undeveloped oil and gas property for $900,000 and paid $170,000 for intangible drilling and development costs. He elected to expense the intangible drilling and development costs. During the current year he sells the property for $950,000

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Federal Taxation 2016 Comprehensive

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