In 2011, Jack purchased undeveloped oil and gas property for $900,000 and paid $170,000 for intangible drilling
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In 2011, Jack purchased undeveloped oil and gas property for $900,000 and paid $170,000 for intangible drilling and development costs. He elected to expense the intangible drilling and development costs. During the current year he sells the property for $950,000 when the property’s adjusted basis is $700,000. Depletion of $200,000 was allowed on the property.
a. What is the realized gain and how much of the gain is ordinary income?
b. For Jack to have a Sec. 1231 gain, the selling price must exceed what amount?
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a 250000 ordinary The realized gain is 250000 950000 700000 and all the gain is or...View the full answer
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Related Book For 
Federal Taxation 2018 Comprehensive
ISBN: 9780134532387
31st Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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