Company X purchased an office building for $2.9 million in March Yr 1. Company X spent an additional $250k to install a new air conditioning and hearing system. On Dec 31, Year 10, when the office building had a fair market value of $3,375,000 and allowable MACRS (tax accounting term) depreciation since Acquisition would have been $775,000, Company X exchanged the building for a warehouse owned by a partnership. The fair market value of the warehouse was $3.2 million and its basis to the partnership was $2 M. In exchange, the partnership assumed a $175k liability on the office building. Company X should report gain on the exchange as (TAX ACCOUNTING AND IRS - internal revenue service - TAX LAW CODES) <\/p>
<\/p>
A $175k sec 1231 gain <\/p>
B $175k sec 1250 gain; $825k sec 1231 gain <\/p>
C $175k sec 1250 gain <\/p>
D $218,703 sec. 1250 gain; $781,297 sec 1231 gain <\/p>", "transcribed_text": "", "related_book": { "title": "Entrepreneurial Finance", "isbn": "1305968352, 978-1337635653, 978-1305968356", "edition": "6th edition", "authors": "J. Chris Leach, Ronald W. Melicher", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/1482.jpg", "uri": "\/textbooks\/entrepreneurial-finance-6th-edition-1482", "see_more_uri": "" }, "free_related_book": { "isbn": "1913988325", "uri": "\/textbooks\/7-maths-practice-papers-and-in-depth-answers-volume-2-1st-edition-978-1913988326-271846", "name": "7+ Maths Practice Papers And In Depth Answers Volume 2", "edition": "1st Edition" }, "question_posted": "2024-06-28 05:42:11", "see_more_questions_link": "\/study-help\/questions\/business-banking-2021-September-12", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/in-the-aftermath-of-the-collapse-of-financial-institutions-like", "description": "In the aftermath of the collapse of financial institutions like Lehman Brothers and audit deficiencies of investment banking firms, a great deal of attention has been devoted to requiring mandatory...", "stars": 3 }, { "url": "\/study-help\/introduction-to-probability-statistics\/we-select-without-replacement-two-cards-from-a-pack-of-1982776", "description": "We select (without replacement) two cards from a pack of 52 cards. The probability that the two cards selected belong to different suits is 3.4 (a) (b) \/ 51-52 34 39 (c) 51 (d) 31 (e) 51 51", "stars": 3 }, { "url": "\/global-reach-inc-is-considering-opening-a-new-warehouse-to", "description": "Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell Moore, controller for Global Reach, has been reading about the advantages of foreign trade zones. He...", "stars": 3 }, { "url": "\/study-help\/questions\/for-c-write-the-code-for-the-functions-of-int-9855658", "description": "For C Write the code for the functions of: int* allocate(int n) - this function should allocate a block of memory to store n integers and should return a pointer to that block of memory void set(int...", "stars": 3 }, { "url": "\/study-help\/questions\/alaskan-motors-has-outstanding-bonds-that-mature-in-13-years-7020623", "description": "Alaskan Motors has outstanding bonds that mature in 13 years and pay $34.50 every 6 months in interest. The par value is $1,000 per bond and the market value is $990. The coupon rate is _____...", "stars": 3 }, { "url": "\/study-help\/questions\/below-are-the-transactions-for-button-sewing-shop-for-march-1646661", "description": "Below are the transactions for Button Sewing Shop for March, the first month of operations. March 1 Issue common stock in exchange for cash of $2,600. March 3 March 5 March 7 Purchase sewing...", "stars": 3 }, { "url": "\/study-help\/questions\/what-idea-justifies-employers-being-conscious-of-employees-working-too-5134249", "description": "What idea justifies employers being conscious of employees working too many long hours? a.) Employees working long hours can be counterproductive to a firm. b.) Constant disengagement by employees...", "stars": 3 }, { "url": "\/study-help\/questions\/cc131-evaluating-profitability-liquidity-and-solvency-lo4-l05-looking-back-5216824", "description": "CC13-1 Evaluating Profitability, Liquidity, and Solvency [LO4, L05) Looking back over the past few years, it is clear that Nicole Mackisey has accomplished a lot running her business, Nicole's...", "stars": 3 }, { "url": "\/study-help\/questions\/27-hw-x-es24606assignments509305-megan-is-an-industrial-5356575", "description": "\" 2.7 HW X + es\/24606\/assignments\/509305 Megan is an industrial engineer for Coyner Cola Company. She takes a random sample of cola cans from the production line each day to determine if the product...", "stars": 3 }, { "url": "\/study-help\/questions\/i-need-some-help-with-question-8-of-case-1-5795507", "description": "I need some help with question 8 of case 1. The book tilte is: Cases in Financial Management. Authors: John S Dunkelberg and Joseph M Sulock B. (a) Suppose Studebaker's goal is to accumulate $400,000...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/horngren-woolens-is-a-manufacturer-of-wool-cloth-the-information-4248232", "next": "\/study-help\/questions\/bramblecompany-expects-to-produce1299600units-of-product-xx-in-2017-monthly-4248234" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "Company X purchased an office building for $2.9 million in March Yr", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/company-x-purchased-an-office-building-for-29-million-in-4248233" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } } "1" } }