1.

Joe purchased a piece of equipment considered 1245 property for $5,500. Depreciation expense of $3,000 has been taken. Assume the equipment was held for more than one year. For each situation below, indicate: a) the amount of gain/loss and b) how the gain/loss is treated from a tax standpoint.

Situation 1: Sold for $7,000

Situation 2: Sold for $3,000

Situation 3: Sold for $2,000

2.

A taxpayer received a parcel of land as a gift. At the time of the gift, the land had a FMV of $10,000. The donors adjusted basis was $12,000. Calculate gain/loss for each of the following situations:

Situation # 1: Taxpayer sells the land for $14,500.

Situation #2: Taxpayer sells the land for $9,500.

Situation #3: Taxpayer sells the land for $10,500.

3. Jeanette owns a rental property that she used for 20 days and rented for 80 days. The rental income was $5,000 and expenses included the following; mortgage interest $2,500; property tax $1,500; insurance and repairs $1,000 and depreciation $2,000. Calculate the net rental income, using the Tax Court Method.