Comprehensive Problem 11-73 (LO 11-1, LO 11-2, LO 11-3, LO 11-4, LO 11-5, LO 11-6) (Algo) [The following information applies to the questions displayed below] WAR (We Are Rich) has been in business since 1989. WAR is an accrual-method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack \& Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack \& Hack (Jack) has gotten along very well with the owner of WAR-Mr. Someday Woods (single). However, in early 2022. Jack Hack and Someday Woods played a round of golf, and Jack, for the first time ever, beat Mr. Woods. Mr. Woods was so upset that he fired Hack \& Hack and has hired you to compute his 2022 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Woods's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 20172021 numbers do not reflect capital loss carryovers. In 2022, Mr. Woods had taxable income in the amount of $500,000 before considering the following events and transactions that transpired in 2022: a. On January 1, 2022, WAR purchased a plot of Iand for $105,000 with the intention of creating a driving range where patrons could test their new golf equipment. WAR nover got around to building the driving range; instead, WAR sold the land on October 1,2022 , for $42,000. b. On August 17, 2022, WAR sold its golf testing machine, "Iron Byron," and replaced it with a now machine, "Iron Tiger." "Iron Byron" was purchased and installed for a total cost of $24,000 on February 5, 2018. At the time of sale, "Iron Byron" had an adjusted tax basis of $6,000. WAR sold "Iron Byron" for $30,000. c. In the months October through December 2022. WAR sold various assets to come up with the funds necessary to Invest in WAR's latest and greatest invention-the three-dimple golf ball. Data on these assets are provided below: d. Finally, on May 7, 2022, WAR decided to sell the building where it tested its plutonlum shaf, lignite head drivers. WAR purchased the bulding on January 5,2010 , for $215,000 ( $190,000 for the buliding, $25,000 for the land). At the time of the sale, the accumulated depreciation on the bullding was \$55,000. WAR sold the bullding (with the land) for $330,000. The fair market value of the land at the time of sale was $50,000. Note: Do not round intermediate computations. Round your final answers to the nearest whole dollar amount. Loss amounts should be indicated by a minus sign. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline Description & \begin{tabular}{l} Gain or \\ (Loss) \end{tabular} & \begin{tabular}{l} Depreciation \\ Recapture \end{tabular} & 51231 & \begin{tabular}{l} Ordinary \\ Income or \\ (Loss) \end{tabular} & \begin{tabular}{l} Short \\ Term \end{tabular} & \begin{tabular}{l} Long Term \\ Total \end{tabular} & \begin{tabular}{l} Long term \\ 28% \end{tabular} & \begin{tabular}{c} Long term \\ 25% \end{tabular} & \begin{tabular}{l} Long term \\ 0/15/20% \end{tabular} \\ \hline a. Land & & & Z & & & & & & \\ \hline b. Iron Byton & & & & & & & & & \\ \hline c1. Sola & & & & & & & & & \\ \hline c2. Chair: & & & & & & & & & \\ \hline c3. Marketable securities & & & & & & & & & \\ \hline c4. Land-for investment & & & & & & & & & \\ \hline C5. Investunent property. & & & & - & & & & & \\ \hline d1. Building & & & & & & & & & \\ \hline d2. Land & & & & & & & & & = \\ \hline & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \\ \hline & & & & & & xis & & & & \\ \hline 51231 netting : & & & & & 11 & & & & \\ \hline Step1 - depreciation recapture & & & & & & & & & \\ \hline - ordinary income & a & & & & & B. & & & a \\ \hline Step 2-51231 Gain or Loss netting & & n+ & & & & & & & \\ \hline - gains or losses exclusive of $1250 & & & & & & ex & & & \\ \hline - Unrecapture 51250 & & & & & & & + & & \\ \hline Step 3-lookback rule. & & Th & & & & & & & \\ \hline - apply to unrecapture 51250 first & & & * & & & & & & \\ \hline Ordinary income & & & & & & & & a & \\ \hline Ramaining unrecopture 51250 & & & & & & & & & \\ \hline Remaining gain - 0/15/20 & & & 1 & 1+110 & & & & F & - \\ \hline & & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|l|l|l|} \hline Capital gain netting: & & & 0 & 0 & 0 & \\ \hline Long lerm capital loss carryover & & & & & & \\ \hline Reclassified & & & & & & \\ \hline & & & & & & \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Toxable Income: & \\ \hline Before transactions & \\ \hline Ordinary income/loss & \\ \hline LTCG \& 25% & \\ \hline LTCG 8 or 15/20% & \\ \hline Taxable income & $ \\ \hline \end{tabular}