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Required information Skip to question [ The following information applies to the questions displayed below. ] WAR ( We Are Rich ) has been in
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The following information applies to the questions displayed below.
WAR We Are Rich has been in business since WAR is an accrualmethod 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 WARMr Someday Woods single However, in early 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 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 numbers do not reflect capital loss carryovers.
Ordinary taxable income $ $ $ $ $
Other items not included in ordinary taxable income:
Net gain loss on disposition of assets $ $
Net longterm capital gain loss on disposition of capital assets $ $ $ $
In Mr Woods had taxable income in the amount of $ before considering the following events and transactions that transpired in :
On January WAR purchased a plot of land for $ with the intention of creating a driving range where patrons could test their new golf equipment. WAR never got around to building the driving range; instead, WAR sold the land on October for $
On August WAR sold its golf testing machine, "Iron Byron," and replaced it with a new machine, "Iron Tiger." "Iron Byron" was purchased and installed for a total cost of $ on February At the time of sale, "Iron Byron" had an adjusted tax basis of $ WAR sold "Iron Byron" for $
In the months October through December WAR sold various assets to come up with the funds necessary to invest in WAR's latest and greatest inventionthe threedimple golf ball. Data on these assets are provided below:
Asset Placed in Service or purchased Sold Initial Basis Accumulated Depreciation Selling Price
Someday's black leather sofa used in office $ $ $
Someday's office chair
Marketable securities
Land held for investment
Other investment property
Finally, on May WAR decided to sell the building where it tested its plutonium shaft, lignite head drivers. WAR purchased the building on January for $$ for the building, $ for the land At the time of the sale, the accumulated depreciation on the building was $ WAR sold the building with the land for $ The fair market value of the land at the time of sale was $
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.
Compute Mr Woods's tax liability for the year. Ignore any net investment income tax for the year and assume the percent qualified business income deduction is included in taxable income before these transactions. Use Tax rate schedules, dividends and capital gains tax rates for reference.
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