WAR (We Are Rich) has been in business since 1985. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR€™s owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR€”Mr. Someday Woods (single). However, in early 2018, Jack Hack and Someday Woods played a round of golf and Jack, for the first time ever, actually beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2018 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Wood€™s activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2013€“2017 numbers do not reflect capital loss carryovers.

In 2018, Mr. Woods had taxable income in the amount of $480,000 before considering the following events and transactions that transpired in 2018:
a. On January 1, 2018, WAR purchased a plot of land for $100,000 with the intention of creating a driving range where patrons could test their new golf equipment. WAR never got around to building the driving range; instead, WAR sold the land on October 1, 2018, for $40,000. 

b. On August 17, 2018, WAR sold its golf testing machine, €œIron Byron€ and replaced it with a new machine €œIron Tiger.€ €œIron Byron€ was purchased and installed for a total cost of $22,000 on February 5, 2014. At the time of sale, €œIron Byron€ had an adjusted tax basis of $4,000. WAR sold €œIron Byron€ for $25,000.

c. In the months October through December 2018, WAR sold various assets to come up with the funds necessary to invest in WAR€™s latest and greatest invention€”the three-dimple golf ball. Data on these assets are provided below:

d. Finally, on May 7, 2018, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January 5, 2006, for $190,000 ($170,000 for the building, $20,000 for the land). At the time of the sale, the accumulated depreciation on the building was $50,000. WAR sold the building (with the land) for $300,000. The fair market value of the land at the time of sale was $45,000.
Part (1): Compute Mr. Woods€™s taxable income after taking into account the transactions described above. 

Part (2): Compute Mr. Woods€™s tax liability for the year. (Ignore any net investment income tax for the year and assume the 20 percent qualified business income deduction is included in taxable income before these transactions.)

Part (3): Complete Mr. Woods€™s Form 8949, Schedule D, and Form 4797 (use the most current version of these schedules) to be attached to his Form 1040. Assume that asset bases are not reported to the IRS.  

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2013 2015 2014 2016 2017 Ordinary taxable income Other items not included in ordinary taxable income Net gain (loss) on disposition $ 4,000 $250,000 $ 2,000 $94,000 $170,000 (6,000) 10,000 3,000 of 51231 assets (15,000) (7,000) Net long-term capital gain (loss) on disposition of capital assets 1,000 (7,000) Placed in Service (or Purchased) Initial Accumulated Selling Asset Sold Basis Depreciation Price Someday's black leather sofa (used in office) Someday's office chair 4/4/17 10/16/18 $ 3,000 $ 540 $ 2,900 3/1/16 2/1/15 11/8/18 8,000 3,000 4,000 Marketable securities 12/1/18 12,000 20,000 Land held for investment 7/1/17 11/29/18 45,000 48,000 8,000 Other investment property 11/30/16 10/15/18 10,000