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HW 1 3 - Use 2 0 2 3 rules. Be sure to identify each item s character. At the end of each amount that
HW Use rules.
Be sure to identify each items character. At the end of each amount that requires a character, you will have
ordinary income or loss,
capital gain or loss which is also shortterm or longterm ie STCG STCL LTCG or LTCL or
unrecaptured gains.
Assume that problem lists all relevant transactions in other words, there is nothing else you need to net against When I ask What is the tax effect? I am asking for a dollar amount and character there may be more than one piece with different characters. Dont calculate the tax liability unless asked to do so you wont have enough information in most of the problems
Bull Run sold a computer for $ on November th of the current year. The computer was purchased for $ two years ago. Bull Run had taken $ of depreciation deductions and used the computer for normal business. What is the tax effect?
Tim Bull, owner of Bull Run, sold his personal computer on November th of the current year. The computer was purchased for $ two years ago and he sold it for $ What is the tax effect?
Alexandra sold equipment that she uses in her business for $ Alexandra bought the equipment two years ago for $ and has claimed $ of depreciation expense. What is the tax effect? Note there are two pieces to this with different characters.
Brandy sold a rental house that she owned for $ Brandy bought the house several years ago for $ and has claimed $ of depreciation expense. Note there are two pieces to this with different characters. What is the tax effect?
Suzanne, an individual, began business four years ago. Assume Suzanne is a sole proprietor who files as a single taxpayer, and her current marginal tax rate is Suzanne owned each of the assets for several years. In the current year, Suzanne sold the following business assets:
Asset Cost Dep. Gain loss
Machinery
Furniture
Building
What is the tax effect? What is the tax liability?
For this problem you will need to figure the gain or loss and characters on each asset separately. Then net the amounts that have the same character so you have one amount in each character category. Then calculate the tax as different characters have different tax rates for each category and sum.
Odintz traded land for land. Odintz originally purchased its land for $ The land Odintz received was purchased by the seller some years ago for $ and was subject to a mortgage of $ that the seller paid off before the transfer. The fair market value of the new land is $ What is Odintz's adjusted basis in the new land after the exchange?
Misha traded computer equipment used in her business to a computer dealer for some new computer equipment. Misha originally purchased the computer equipment several years ago for $ and it had an adjusted basis of $ and a FMV of $ at the time of the exchange. The new computer equipment has a FMV of $ Misha also received a used copier worth $ in the transaction. What is Misha's realized and recognized gainloss on the exchange? What is her basis in the new computer? In the copier?
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