Questions from Federal Taxation

Q: Sissie owns two items of business equipment. Both were purchased in

Sissie owns two items of business equipment. Both were purchased in 2013 for $100,000, both have a 7-year MACRS recovery period, and both have an adjusted basis of $37,490. Sissie is considering selli...

Q: Tom Howard and Frank Peters are good friends (and former college

Tom Howard and Frank Peters are good friends (and former college roommates). Each owns investment property in the other’s hometown (Tom lives in Kalamazoo, MI; Frank lives in Austin, TX). To make thei...

Q: Faith Godwin is a dealer in securities. She has spotted a

Faith Godwin is a dealer in securities. She has spotted a fast-rising company and would like to buy and hold its stock for investment. The stock is currently selling for $2 per share, and Faith thinks...

Q: In a § 1031 like-kind exchange, Rafael exchanges a

In a § 1031 like-kind exchange, Rafael exchanges a piece of equipment that originally cost $200,000. On the date of the exchange, the equipment given up has an adjusted basis of $85,000 and a fair mar...

Q: Dexter owns a large tract of land and subdivides it for sale

Dexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers fo...

Q: On May 9, 2017, Glenna purchases 500 shares of Ignaz

On May 9, 2017, Glenna purchases 500 shares of Ignaz Company stock for $7,500. On June 30, 2017, she writes a call option on the stock, giving the grantee the right to buy the stock for $9,000 during...

Q: Lena is a sole proprietor. In April of this year,

Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $26,000 with an adjusted basis of $15,500 for $17,000. Later in the year, Lena sold another piece of e...

Q: Jacob purchased business equipment for $56,000 in 2014 and

Jacob purchased business equipment for $56,000 in 2014 and has taken $35,000 of regular MACRS depreciation. Jacob sells the equipment in 2017 for $26,000. What is the amount and character of Jacob’s g...

Q: An apartment building was acquired in 2008. The depreciation taken on

An apartment building was acquired in 2008. The depreciation taken on the building was $123,000, and the building was sold for a $34,000 gain. What is the maximum amount of 25% gain?

Q: Enzo is a single taxpayer with the following gains and losses for

Enzo is a single taxpayer with the following gains and losses for 2017: • $2,100 short-term capital loss. • $24,000 long-term capital gain from sale of stock. • $14,000 § 1231 gain that is all unrec...