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Hi I'm taking Introduction to Federal Tax this semester and now have trouble with problem in the attachment. I'll be really appreciated if you can
Hi I'm taking Introduction to Federal Tax this semester and now have trouble with problem in the attachment. I'll be really appreciated if you can help me.
1. Warren's 2015 adjusted gross income consists of the following items: Salary $150,000 Interest income 15,000 Rental income 18,000 Section 1245 gains 25,000 Section 1231 gains 22,000 Section 1231 losses (13,000) LTCG 22,000 LTCL (8,000) STCG 2,000 STCL Carryover (9,000) Warren's combined 1231 gains and losses recognized over the prior five tax years included a net loss of $10,000. The STCL carryover arose from a loss reported in 2010. What net amounts of ordinary income, LTCG income and STCG income will Warren's 2015 adjusted gross income consist of? (i.e. what amounts are reported after completing the netting process?) Ordinary Income LTCG STCG a. $208,000 $16,000 $- 0 b. $217,000 $14,000 $(7,000) c. $208,000 $23,000 $(7,000) d. $217,000 $7,000 $- 0 2. Harry sells an apartment building for $117,000. The building was held as an investment, it cost $95,000 and had an basis of $83,000 at the date of the sale. If Harry is in the 33% marginal tax rate bracket without considering the effect of the sale, how much tax is paid on the gain on the sale of the apartment building? a. $5,100 b. $6,300 c. $7,300 d. $8,500 3. Dontrell sells a building used in his business at a gain of $20,000. The building was purchased in 2006, and $15,000 of depreciation had been deducted on the building to the date of sale. Dontrell's only other property transaction resulted in a $5,000 loss on the sale of equipment used in his business. Dontrell's marginal tax rate is 33% without considering these two transactions. As a result of these transactions I. Dontrell will pay additional tax of $2,850. II. Dontrell can only deduct $3,000 of the loss on the sale of the equipment and pays a tax of $3,750 on the sale of the building. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correctStep by Step Solution
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