Problem 8-19 Capital Gains and Casualty Gains and Losses (LO 8.9) An office machine used by Josie in her accounting business was completely destroyed by fire. The adjusted basis of the machine was $8,000 (original basis of $14,000 less accumulated depreciation of $6,000). The machine was not insured. Calculate the amount and nature of Josie's gain or loss as a result of this casualty, (Assume this is the taxpayer's only casualty gain or loss.) Amount of gain or loss: $ more Check My Works remains Problem 8-18 Section 1231 Gains and Losses, Depreciation Recapture (LO 8.7, 5.8) William sold Section 1245 property for $25,000 in 2020. The property cost $40,000 when it was purchased 5 years ago. The depreciation claimed on the property was $21,000 If an amount is zero, enter "o". a. Calculate the adjusted basis of the property. $ b. Calculate the realized gain on the sale $ c. Calculate the amount of ordinary income under Section 1245 $ d. Calculate the Section 1231 gain. $ Problem 8-14 Intangibles (LO 8.6) Derek purchases a small business from Art on June 30, 2020. He paid the following amounts for the business: Fixed assets $180,000 Goodwill 40,000 Covenant not to compete 30,000 Total $250,000 a. How much of the $250,000 purchase price is for Section 197 intangible assets? b. What amount can Derek deduct on his 2020 tax return as Section 197 Intangible amortization? Use months, not days, in your computations. Round your answer to the nearest dollar. Problem 8-10 Modified Accelerated Cost Recovery System (MACRS), Usted Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 9.4, 8.5) On September 14, 2020, Jay purchased a passenger automobile that is used 75 percent in his business. The automobile has a basis for depreciation purposes of $45,000, and Jay uses the accelerated method under MACRS. Jay does not elect to expense under section 179. Click here to access the depreciation table and click here to access the annual automobile depreciation limitations. Calculate Jay's depreciation deduction for 2020 assuming bonus depreciation. Problem 8-5 Modified Accelerated Cost Recovery System (MACRS) (LO 8.2) From the dropdown list, select the correct MACRS depreciation life for each asset listed. a. An automobile b. Business furniture c. A computer d. Residential real estate e. Commercial real estate f. Land more Check My Work uses remaining Problem 8-4 Modified Accelerated Cost Recovery System (MACRS) (LO 8.2) On July 3, 2020, Holly purchased a residential apartment building. The cost basis assigned to the building is $750,000. Holly also owns another residential apartment building that she purchased on November 15, 2020, with a cost basis of $410,000 Click here to access the depreciation tables. Round your answers to the nearest dollar. a. Calculate Holly's total depreciation deduction for the apartments for 2020 using MACRS. $ b. Calculate Holly's total depreciation deduction for the apartments for 2021 using MACRS. 3 more Check My Work uses remaining Problem 8-3 Modified Accelerated Cost Recovery System (MACRS), Election to Expense (Section 179) (LO 8.2 8.3) Mike purchases a new heavy-duty truck (5-year class recovery property) for his delivery service on March 30, 2020. No other assets were purchased during the year. The truck is not considered a passenger automobile for purposes of the listed property and luxury automobile limitations. The truck has a depreciable basis of $46,000 and an estimated useful life of 5 years. Assume half-year convention for tax. Click here to access the depreciation tables. a. Calculate the amount of depreciation for 2020 using financial accounting straight-line depreciation (not the straight-line MACRS election) over the truck's estimated useful life. b. Calculate the amount of depreciation for 2020 using the straight-line depreciation election, using MACRS tables over the minimum number of years with no bonus depreciation or election to expense. c. Calculate the amount of depreciation for 2020, including bonus depreciation but no election to expense, that Mike could deduct using the MACRS tables. d. Assume no Income limit on the expense election Calculate the amount of depreciation for 2020 including the election to expense but no bonus depreciation that Mike could deduct