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Use 2 0 2 3 rules. Be sure to identify each item s character. At the end of each amount that requires a character, you

Use 2023 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 short-term or long-term (i.e. STCG, STCL, LTCG, or LTCL), or
1250 unrecaptured gains.
Assume that problem lists all relevant transactions (in other words, there is nothing else you need to net against). When asked about What is the tax effect? find 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.
1. Sandra sold some equipment for $12,275 in cash, $1,800 of office products, the buyer's assumption of her $2,300 loan, and incurred selling expenses of $1,600. What is Sandra's amount realized in the transaction?
2.Bull Run sold a computer for $1,900 on November 10th of the current year. The computer was purchased for $2,700 two years ago. Bull Run had taken $520 of depreciation deductions and used the computer for normal business. What is the tax effect?
3. Tim Bull, owner of Bull Run, sold his personal computer on November 10th of the current year. The computer was purchased for $3,800 two years ago and he sold it for $1,900. What is the tax effect?
4.Andrea sold a piece of machinery she used in her business for nine months. The amount realized was $59,422, and the adjusted basis was $41,000. What is the tax effect?
5. Jessie sold a piece of land held for investment for $450,000. Jessie bought the land two years ago for $395,000. What is the tax effect?
6.Sunshine LLC sold furniture for $75,000. Sunshine bought the furniture for $81,799 several years ago and has claimed $25,000 of depreciation expense on the furniture. What is the tax effect?
7. Alexandra sold equipment that she uses in her business for $190,000. Alexandra bought the equipment two years ago for $185,450 and has claimed $10,000 of depreciation expense. What is the tax effect? (Note there are two pieces to this with different characters.)
8.Frederique sold furniture that she uses in her business for $12,000. Frederique bought the furniture a few years ago for $34,000 and has claimed $18,000 of depreciation expense. What is the tax effect?
9. Brandy sold a rental house that she owned for $285,000. Brandy bought the house several years ago for $140,000 and has claimed $18,000 of depreciation expense. (Note there are two pieces to this with different characters.)
What is the tax effect?
10. 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 32%. 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 17,8507,6508,800
Furniture 5,9501,700(1,300)
Building 392,00087,11190,000
What is the tax effect? What is the tax liability?
For this problem figure out the gain or loss and character(s) 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.
11. Odintz traded land for land. Odintz originally purchased its land for $370,000. The land Odintz received was purchased by the seller some years ago for $200,000 and was subject to a mortgage of $50,000 that the seller paid off before the transfer. The fair market value of the new land is $340,000. What is Odintz's adjusted basis in the new land after the exchange?
12. 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 $19,000, and it had an adjusted basis of $12,000 and a FMV of $14,000 at the time of the exchange. The new computer equipment has a FMV of $15,000. Misha also received a used copier worth $1,375 in the transaction. What is Misha's realized and recognized gain/loss on the exchange? What is her basis in the new computer? In the copier?

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