Heather owned a beachfront house that she rented to tourists. Heather's property had a fair market...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Heather owned a beachfront house that she rented to tourists. Heather's property had a fair market value of $860,000, an adjusted basis of $637,000, and an outstanding mortgage of $135,000. Melissa and Jon Akins owned undeveloped land that they held for investment. The Akins' property had a fair market value of $1,010,000, an adjusted basis of $782,000, and an outstanding mortgage of $480,000. Heather and the Akins entered into an exchange involving their real properties during 2017. As part of the exchange, the Akins paid $195,000 in cash to Heather, Heather assumed the Akins' mortgage on the land, and the Akins assumed Heather's mortgage on the house. Heather will now hold the land for investment, and Melissa and Jon will rent the beachfront house to tourists. Heather also owned a mountain house that she rented to skiers. Heather's property had a fair market value of $468,000 and an adjusted basis of $394,000. Dirk owned a lakefront house that he had only used as his personal summer residence since 2001. Dirk's property had a fair market value of $621,000, an adjusted basis of $337,000, and an outstanding mortgage of $149,000. Heather and Dirk entered into an exchange involving their real properties during 2017. As part of the exchange, Heather assumed the mortgage on Dirk's property and Heather paid Dirk $4,000 in cash. Heather will now rent the lakefront house to vacationers, and Dirk will live full-time in the mountain house. Required: Explain what gain or loss, if any, Heather, the Akins, and Dirk will realize and recognize from the changes described above and what adjuste have in the prc ties received in the exchanges. Heather owned a beachfront house that she rented to tourists. Heather's property had a fair market value of $860,000, an adjusted basis of $637,000, and an outstanding mortgage of $135,000. Melissa and Jon Akins owned undeveloped land that they held for investment. The Akins' property had a fair market value of $1,010,000, an adjusted basis of $782,000, and an outstanding mortgage of $480,000. Heather and the Akins entered into an exchange involving their real properties during 2017. As part of the exchange, the Akins paid $195,000 in cash to Heather, Heather assumed the Akins' mortgage on the land, and the Akins assumed Heather's mortgage on the house. Heather will now hold the land for investment, and Melissa and Jon will rent the beachfront house to tourists. Heather also owned a mountain house that she rented to skiers. Heather's property had a fair market value of $468,000 and an adjusted basis of $394,000. Dirk owned a lakefront house that he had only used as his personal summer residence since 2001. Dirk's property had a fair market value of $621,000, an adjusted basis of $337,000, and an outstanding mortgage of $149,000. Heather and Dirk entered into an exchange involving their real properties during 2017. As part of the exchange, Heather assumed the mortgage on Dirk's property and Heather paid Dirk $4,000 in cash. Heather will now rent the lakefront house to vacationers, and Dirk will live full-time in the mountain house. Required: Explain what gain or loss, if any, Heather, the Akins, and Dirk will realize and recognize from the changes described above and what adjuste have in the prc ties received in the exchanges.
Expert Answer:
Answer rating: 100% (QA)
Heather will realize a gain of 195000 from the exchange with the Akins She will have an adjusted bas... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro
Posted Date:
Students also viewed these accounting questions
-
Cosmo contributed land with a fair market value of $400,000 and a tax basis of $90,000 to the Y Mountain partnership in exchange for a 25 percent profits and capital interest in the partnership. The...
-
Carl transfers land with a fair market value of $120,000 and basis of $30,000, to a new corporation in exchange for 85 percent of the corporations stock. The land is subject to a $45,000 liability,...
-
In October, 2003, Mountain Camo, Inc. entered into a contract with Wendall and Janet Mills in which Mountain Camo sold the Mills a number of items of "close-out inventory." According to the contract,...
-
You are given the following information concerning four stocks: a) Using 20X0 as the base year, construct three aggregate measures of the market that simulate the Dow Jones Industrial Average, the...
-
Refer to the Alaskan Lichen Radionuclide Baseline Research study, presented in Exercise. In a sample of n = 9 lichen specimens, the researchers found the mean and standard deviation of the amount of...
-
How does a proprietorship's balance sheet differ from a corporation's balance sheet? How are the two balance sheets similar?
-
Suppose that you make an investment that will cost $\$ 1,000$ and will pay you interest of $\$ 100$ per year for the next 20 years. Then at the end of the 20 years, the investment will pay $\$...
-
Sorrento Industries manufactures plastic bottles for the food industry. On average,Sorrento pays $ 71 per ton for its plastics. Sorrentos waste disposal company has increased its waste disposal...
-
Smiley Industrial Goods has bonds on the market making semi-annual payments of $37.4372, with 13 years to maturity, and selling for $1,095. At this prior, the bond yield per cent. What is the annual...
-
Reconsider Problem 9.3. Suppose now that the demand at each of the destinations has been reduced by 10, so that the new demands are 20, 30, and 20 at destinations 1, 2, and 3, respectively. Introduce...
-
Find the moment about point A due to the two forces using two different methods by a) Breaking each force into components (see video 3-4). b) Using the perpendicular distances to each of the shown...
-
The deltoids exert a force of 100 N at an angle of 45 degrees to the humerus. The tendon inserts 7.5 cm from the shoulder joint axis of rotation. The arm is abducted 45 degrees from the vertical or...
-
A patient rehabilitating a knee injury performs knee extension exercises wearing a 20 N ankle weight. Calculate the amount of torque generated at the knee by the weight boot for four positions, given...
-
A power plant transmits 106 [W] of power through wires that have a resistance R = 1 . a) If the power is transmitted at 105 [V], what is the current? b) In this case, how much power is lost to heat?...
-
When a spacecraft is launched into space, how does it use Newton's laws of motion to navigate and change its trajectory? Can you think of a real-life space mission that utilized these principles?
-
Considering a pendulum experiencing simple harmonic motion; whenever the bob is located at the equilibrium point, what do we know about the bob's speed, acceleration and the force acting on the bob?
-
were recorded The incomplete data in the table during an experiment in which two carts on a friction- less one-dimensional track collided head-on. What are the magnitudes of the average force F2...
-
Proposals have been made to ?sail? spacecraft to the outer solar system using the pressure of sunlight, or even to propel interstellar spacecraft with high-powered, Earth-based lasers. Sailing...
-
The Devon Co. just issued a dividend of $2.35 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for...
-
Teddy Bear Planet Inc. has a project with the following cash flows: Year Cash flow ($) 0........ -$ 11,000 1.......... 5,500 2.......... 4,000 3......... 3,000 The company evaluates all projects by...
-
Sardano Corp. is a large, publicly held company that is considering leasing aware-house. One of the companys divisions specializes in manufacturing steel, and this particular warehouse is the only...
-
What are some of the issues that should be considered when conducting marketing research?
-
Why do organizations conduct marketing research?
-
What are the different methods of conducting marketing research?
Study smarter with the SolutionInn App