6 Firefox File Edit View History Bookmarks Tools Window Help L:| _ '7? 1) 14% Eli sun 1:28 PM Q 0 EE , O O G O Bookerl Mindt M Reset Passwort .. Reset Passwori Q Popl- Digital l3 8 Colorado State 8 Module 4: Port m Question 27 X H Dashboard I] MSN i Outlook, + v 6 C Q 0 3 https://ezto.mheducation.com/eXt/map/index.htmllcon=con&externaLbrowser=O8ilaunchUrl=http E 5:} '1' III\\ 5 Ex :0 5 Module 4: Critical Thinking 0 Saved Help Save& Exit Submit 2 Part20f3 20 points eBook References WAR (We Are Rich) has been in business since 1988. 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 WARMr. Someday Woods (single). However, in early 2021, Jack Hack and Someday Woods played a round of golf, and Jack, for the first time ever, beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2021 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. Woods'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 20162020 numbers do not reflect capital loss carryovers. 2016 2017 2018 2019 2020 Ordinary taxable income $ 4,340 $ 2,170 $ 97,995 $ 177,225 $ 260,625 Other items not included in ordinary taxable income: Net gain (loss) on disposition of 1231 assets 5; 3,510 10,850 $ (7,020) Net long-term capital gain (loss) on disposition of capital assets $ (16,275) $ 1,170 $ (18,400) $ (8,700) In 2021, Mr. Woods had taxable income in the amount of $514,000 before considering the following events and transactions that transpired in 2021: a. On January 1, 2021, WAR purchased a plot of land for $108,500 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, 2021, for $43,400. b. On August 17, 2021, WAR sold its golftesting machine, \"Iron Byron,\" and replaced it with a new machine, \"Iron Tiger.\" \"Iron Byron\" was purchased and installed for a total cost of $25,400 on February 5,2017. At the time of sale, \"Iron Byron" had an adjusted tax basis of $7,400. WAR sold \"Iron Byron" for $33,500. c. In the months October through December 2021, WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest inventionthe three-dimple golf ball. Data on these assets are provided below: Placed in Service (or Initial Accumulated Selling .Hsi ,.,,L,,,a\\ \6 Firefox File Edit View History Bookmarks Tools Window Help LEI \"5*\" 1) man. Sun1:28 PM Q 0 a: r W, """**' ' O O a O Bookerl Mindt M Reset Passwort .. Reset Passwort O Popl - Digital 5 8 Colorado State 8 Module 4: Porll m Question 2 , X Dashboard I] MSN 1 Outlook, + v 6 C Q 0 3 https://ezto.rnheducation.com/eXt/map/index.htmllcon=con&externaLbrowser=0&launchUrl=http E 52? '1' III\\ E Ex :9 5 Module 4: Critical Thinking 0 Saved Help Save & Exit Submit : 2 \"you \"w u.. What-\" \"A mum v! mm\". .mu W... m... \"you .0. Wm\"... c. In the months October through December 2021, WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest inventionthe threedimple golf ball. Data on these assets are provided below: pa20f3 Placed in _ Service (or Initial Accumulated Selling Asset purchased) Sold Basis Depreciation Price Someday's black leather sofa 20 (used in office) 4/4/20 10/16/21 $ 3,680 $ 710 $ 3,410 points Someday's office chair 3/1/19 11/8/21 9,360 3,340 4,850 Marketable securities 2/1/18 12/1/21 14,040 0 21,700 Land held for investment 7/1/20 11/29/21 53,500 0 55,650 E k Other investment property 11/30/19 10/15/21 18,500 0 14,800 9 00 References d. Finally, on May 7, 2021, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers WAR purchased the building on January 5, 2009, for $232,500 ($204,000 forthe building, $28,500 for the land). At the time ofthe sale, the accumulated depreciation on the building was $58,500. WAR sold the building (with the land) for $351,000. The fair market value of the land at the time of sale was $53,500. (Do not round intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated by a minus sign.) Comprehensive Problem 11-73 Part 2 (Algo) Compute Mr. Woods's tax liability for the year. (Ignore any net investment income tax for the year and assume the 20 percent qualied business income deduction is included in taxable income before these transactions.) Use Tax rate schedules, dividends and capital gains tax rates for reference. 7 i Firefox File Edit View History Bookmarks Tools Window Help , El Sun1:gS'PMl CK O 0 6v 0 Buokerl Mindb M Reset Passwort >4 Reset Passwort O Popl - Digital Bi 8 Colorado State 8 Module 4: Portl m Question 2 , X Dashboard I] MSN | Outlook, + v ( C Q 0 E] 33 https://ezto.rnheducation.com/ext/map/index.html'Lcon=con&externaLbrowser:0&launchUrlzhttp: E 52? '1' III\\ 5 (X 8 5 Module 4: Critical Thinking 0 Saved Help Save & Exit Submit w 2 (1. Finally, on May 7, 2021, WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January 5, 2009, for $232,500 ($204,000 for the building, $28,500 for the land). At the time ofthe sale, the accumulated depreciation on the building was $58,500. WAR sold the building (with the land) for Pm 2 0,3 $351,000. The fair market value of the land at the time of sale was $53,500. (Do not round intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated by a minus sign.) 20 points eBook Comprehensive Problem 11-73 Part 2 (Algo) References Compute Mr. Woods's tax liability for the year. (Ignore any net investment income tax for the year and assume the 20 percent qualied business income deduction is included in taxable income before these transactions.) Use Tax rate schedules, dividends and car gains tax rates for reference. Tax on ordinary income Tax on 25% Gain Tax on OHS/20% Gain (taxed at 20%) Total tax liability $ 0