Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2017. The assets of the

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Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2017. The assets of the business are as follows:

Asset Agnes's Adjusted Basis FMV $ 70,000 $ 70,000 100,000 160,000 Accounts receivable Inventory Equipment 90,000 150,00

a. Calculate Agnes's realized and recognized gain.
b. Determine Rod's basis for each of the assets.
c. Write a letter to Rod informing him of the tax consequences of the purchase. His address is 300 Riverview Drive, Delaware, OH 43015.

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South Western Federal Taxation 2018 Essentials Of Taxation Individuals And Business Entities

ISBN: 9781337386173

21st Edition

Authors: William A. Raabe, James C. Young, Annette Nellen, David M. Maloney

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Question Posted: Oct 31, 2017 01:32 AM

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Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2017. The assets of the

Question:

Asset Agnes's Adjusted Basis FMV $ 70,000 $ 70,000 100,000 160,000 Accounts receivable Inventory Equipment 90,000 150,000 Furniture and fixtures 95,000 130,000 Building 190,000 250,000 Land 25,000 $620,000 75,000 Total $785,000

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a Agness overall realized and recognized gain on the sale of her business is calculated as follows Amount realized 990000 Less Adjusted basis 620000 R...View the full answer

South Western Federal Taxation 2018 Essentials Of Taxation Individuals And Business Entities

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