Ansel purchased raw land three years ago for $140,000 to hold as an investment. After watching...
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Ansel purchased raw land three years ago for $140,000 to hold as an investment. After watching the value of the land drop to $100,000, he decided to contribute it to Mountainside Developers LLC in exchange for a 5 percent capital and profits interest. Mountainside plans to develop the property and will treat it as inventory, like all the other real estate it holds. a. If Mountainside sells the property for $100,000 after holding it for one year, how much gain or loss does it recognize and what is the character of the gain or loss? (Hint See $724.) Capital gain Capital loss Ordinary gain Ordinary loss b. If Mountainside sells the property for $50,000 after holding it for two years, how much gain or loss does it recognize and what is the character of the gain or loss? c.If Mountainside sells the property for $100,000 after holding it for six years, how much gain or loss does it recognize and what is the character of the gain or loss? Reggie contributed $32,000 in cash and a capital asset he had held for three years with a fair market value of $64,000 and tax basis of $16,000 for a 5 percent capital and profits interest in Green Valley LLC. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) a. If Reggie sells his LLC interest 13 months later for $96,000 when the tax basis in his LLC is still $48,000, how much gain does he report and what is its character? Long-term capital gain Long-term capital loss Ordinary gain Ordinary loss b. If Reggie sells his LLC interest two months later for $96,000 when the tax basis in his LLC is still $48,000, how much gain does he report and what is its character? {Hint: See Reg. $1.1223-3) Ansel purchased raw land three years ago for $140,000 to hold as an investment. After watching the value of the land drop to $100,000, he decided to contribute it to Mountainside Developers LLC in exchange for a 5 percent capital and profits interest. Mountainside plans to develop the property and will treat it as inventory, like all the other real estate it holds. a. If Mountainside sells the property for $100,000 after holding it for one year, how much gain or loss does it recognize and what is the character of the gain or loss? (Hint See $724.) Capital gain Capital loss Ordinary gain Ordinary loss b. If Mountainside sells the property for $50,000 after holding it for two years, how much gain or loss does it recognize and what is the character of the gain or loss? c.If Mountainside sells the property for $100,000 after holding it for six years, how much gain or loss does it recognize and what is the character of the gain or loss? Reggie contributed $32,000 in cash and a capital asset he had held for three years with a fair market value of $64,000 and tax basis of $16,000 for a 5 percent capital and profits interest in Green Valley LLC. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) a. If Reggie sells his LLC interest 13 months later for $96,000 when the tax basis in his LLC is still $48,000, how much gain does he report and what is its character? Long-term capital gain Long-term capital loss Ordinary gain Ordinary loss b. If Reggie sells his LLC interest two months later for $96,000 when the tax basis in his LLC is still $48,000, how much gain does he report and what is its character? {Hint: See Reg. $1.1223-3)
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Answer Part 1 a Capital loss of 40000 140000100000 As per section 724 c where an asset that was cont... View the full answer
Related Book For
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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