Questions from Federal Taxation

Q: A fire totally destroys a manufacturing plant owned by Ansel Corporation.

A fire totally destroys a manufacturing plant owned by Ansel Corporation. The plant, located in Louisiana, has been used for more than 30 years and is fully depreciated. Ansel's insurance pays $500,0...

Q: MacKenzie owns a boat rental business. During the current year,

MacKenzie owns a boat rental business. During the current year, a tidal wave sweeps through the harbor where she keeps her boats anchored. Four boats are totally destroyed, but the rest of the renta...

Q: Alley's automobile dealership, which has an adjusted basis of $400

Alley's automobile dealership, which has an adjusted basis of $400,000, is destroyed by a hurricane in the current year. Alley's receives $600,000 from its insurance company to cover the loss. Alley...

Q: In each of the following cases, determine the amount of realized

In each of the following cases, determine the amount of realized gain or loss and the recognized gain or loss: a. Cheryl sells her house for $73,000 and she pays $4,000 in commissions on the sale. Sh...

Q: Aretha sells her house on June 9, 2017, for $

Aretha sells her house on June 9, 2017, for $220,000 and pays commissions of $10,000 on the sale. She had purchased the house for $60,000 and made capital improvements costing $15,000. What are Areth...

Q: Mai, a single taxpayer, sells her residence in the suburbs

Mai, a single taxpayer, sells her residence in the suburbs for $300,000. She bought the house twelve years ago for $60,000 and made $30,000 of improvements to it. Mai buys a new downtown condominium...

Q: Manuel and Rita sell their home in Minneapolis for $495,

Manuel and Rita sell their home in Minneapolis for $495,000, incurring selling expenses of $25,000. They had purchased the residence for $85,000 and made capital improvements totaling $20,000 during t...

Q: One primary problem in properly accounting for property dispositions is differentiating capital

One primary problem in properly accounting for property dispositions is differentiating capital assets and Section 1231 property. Why is it important to correctly identify as either a capital asset o...

Q: Kerri and John are married. On May 12, 2017,

Kerri and John are married. On May 12, 2017, they sell their home for $190,000 and purchase another residence costing $225,000. What is Kerri and John’s realized and recognized gain in each of the fo...

Q: Gary and Gertrude are married on April 8, 2016. They

Gary and Gertrude are married on April 8, 2016. They use Gertrude’s home as their residence. Gertrude purchased the home on November 14, 2014, for $60,000. On February 19, 2017, Gertrude is killed...