Problem 17-31 (Algorithmic) (LO. 1, 2)

Jenny purchased timber on a 100-acre tract of land in South Dakota in March 2019 for $329,000. On January 1, 2021, the timber had a fair market value of $423,000. Because of careless cutting in November 2021, when the fair market value was $470,000, the wood was sold on January 30, 2022, for $282,000.

If there is no gain or loss, enter "0" as the amount.

Question Content Area

a & b. What gain (loss) was recognized in 2020, 2021, and 2022 if Jenny elected to treat the cutting as a sale? What is the nature of any gain or loss?

In 2020, there is

a 1231 gain/an ordinary gain/an ordinary loss/no gain or loss/no gain or loss

recognized of $????.

In 2021, there is

a 1231 gain/an ordinary gain/an ordinary loss/no gain or loss/a 1231 gain

recognized of $????

In 2022, there is

a 1231 gain/a 1231 loss/an ordinary gain/an ordinary loss/no gain or loss/an ordinary loss

recognized of $????

Question Content Area

c. How would the gains (or losses) that Jenny recognized in 2021 and 2022 change if the timber were sold in December 2021?

A capital loss would be recognized in 2021 instead of 2022. A 1231 gain would be recognized in 2021 instead of 2022. An ordinary gain would be recognized in 2021 instead of 2022. An ordinary loss would be recognized in 2021 instead of 2022. A capital loss would be recognized in 2021 instead of 2022.

Question Content Area

d. If the timber was worth only $164,500 on January 1, 2021, was cut in November when it was worth $141,000, and was sold in December for $188,000, how would the gains (or losses) that Jenny recognized in 2020, 2021, and 2022 change?

In 2020, there would be

a 1231 gain/an ordinary gain/an ordinary loss/no gain or loss/no gain or loss

recognized of $????

In 2021, there would be

a 1231 gain/a 1231 loss/no gain or loss/a 1231 loss

of $???? and

an ordinary gain/an ordinary loss/an ordinary gain

of $????

In 2022, there would be

a 1231 gain/an ordinary gain/an ordinary loss/no gain or loss/an ordinary gain

recognized of $????

*****Part D is where I am struggling the most for getting values. However a the entire question is a challenge and I need assistance.