Ralphie purchases Higbee's department store for $3,800,000 (business acquisition) on April 1, 2021. The identifiable assets...

 

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Ralphie purchases Higbee's department store for $3,800,000 (business acquisition) on April 1, 2021. The identifiable assets of the business (all long-term) are as follows: Accum. Depreciation $ 0 FMV $1,500,000 300,000 0 200,000 900,000 Inventory Accts Receivable Fixtures & Equipment Building Cost $750,000 300,000 150,000 600,000 100,000 150,000 Additionally, the parties agree to assign $350,000 to a 5-year covenant not-to-compete ($0 basis to Higbee). 1) Calculate the amount & character of Higbee's recognized gain on each asset sold (20) 2) Calculate Ralphie's basis on each asset acquired (15) 3) Calculate Ralphie's 2021 deductible expense related to the covenant-not-to-compete (5) Ralphie purchases Higbee's department store for $3,800,000 (business acquisition) on April 1, 2021. The identifiable assets of the business (all long-term) are as follows: Accum. Depreciation $ 0 FMV $1,500,000 300,000 0 200,000 900,000 Inventory Accts Receivable Fixtures & Equipment Building Cost $750,000 300,000 150,000 600,000 100,000 150,000 Additionally, the parties agree to assign $350,000 to a 5-year covenant not-to-compete ($0 basis to Higbee). 1) Calculate the amount & character of Higbee's recognized gain on each asset sold (20) 2) Calculate Ralphie's basis on each asset acquired (15) 3) Calculate Ralphie's 2021 deductible expense related to the covenant-not-to-compete (5)

Answer rating: 100% (QA)

1 Calcul ate the amount character of Hig bee s recognized gain on each asset sold 20 ANS WER In ventory 750 000 cost 0 acc um ulated depreciation 1 500 000 FM V Recogn ized Gain of 750 000 Ord inary I... View the full answer