A) If this building is sold on 1/1/2012 for $350,000 what is the Gain or Loss recognized for tax purposes?

Hint: GAIN= Sales Proceeds less Cost of Building, Land & Equipment Plus depreciation.

A. -$155,000B. -$135,060C. -$140,060D. $350,000

B) What is the Net Cash Flow to the owner on this property from the Sale? Hints: Assume balance of loan at time of sale was: $368,800 No commissions, broker fees or Taxes paid to keep this simple.

NET CASH FLOW = Cash in less Cash Out Cash in = sale proceeds cash out = repayment of debt

A. $350,000

B.$368,800

C.-$68,000

D.-$18,800

idd Taxpayer purchased a rental property in San Diego, CA on 1/1/2011. He placed the property in service at this same time. He needs your help organizing is numbers for his tax returns this year he following details his transactions while operating this rental property Purchase Date: 1-1-11 Cost: Loan Cash Down payment Assume 20% of the cost of the property is allocable to Land cost $500,000 $400,000 100,000 36,000 Annual Rents Collected (Includes $2500 of prepaid rents received for 2012 at the end of 2011) Vacancy Expected Deposits collected (Must return to tenant if all conditions are met on departure) 5% 12,000 Annual Cash Out Mortgage Interest Principal Insurance Repairs - Minor Flood Repairs Maintenance Property Tax Advertising 28,000 2,600 2,500 750 4,500 1,200 5,500 75 Credit reports Bank fees Accounting Fees Appliances for Units 180 120 1,200 5,000 Other Information Uncollected rents Gift from Grandmother Insurance Proceeds from Flood 1,850 10,000 4,500