Questions from Individual Taxation

Q: Montana Max sells a 2,500-acre ranch for $

Montana Max sells a 2,500-acre ranch for $1,000,000 in cash, a note receivable of $1,000,000 and debt relief of $2,400,000. He also pays selling commissions of $60,000. In addition, Max agrees to buil...

Q: Hawkeye sold farming equipment for $55,000. It bought

Hawkeye sold farming equipment for $55,000. It bought the equipment four years ago for $75,000, and it has since claimed a total of $42,000 in depreciation deductions against the asset. Explain how to...

Q: When a taxpayer sells an asset, what is the difference between

When a taxpayer sells an asset, what is the difference between realized and recognized gain or loss on the sale?

Q: What does it mean to characterize a gain or loss? Why

What does it mean to characterize a gain or loss? Why is characterizing a gain or loss important?

Q: Explain the difference between ordinary, capital, and §1231 assets

Explain the difference between ordinary, capital, and §1231 assets.

Q: Discuss the reasons why individuals generally prefer capital gains over ordinary gains

Discuss the reasons why individuals generally prefer capital gains over ordinary gains. Explain why corporate taxpayers might prefer capital gains over ordinary gains.

Q: Dakota Conrad owns a parcel of land he would like to sell

Dakota Conrad owns a parcel of land he would like to sell. Describe the circumstances in which the sale of the land would generate §1231 gain or loss, ordinary gain or loss, or capital gain or loss. A...

Q: Lincoln has used a piece of land in her business for the

Lincoln has used a piece of land in her business for the past five years. The land qualifies as §1231 property. It is unclear whether Lincoln will have to recognize a gain or loss when she eventually...

Q: Explain Congress’s rationale for depreciation recapture.

Explain Congress’s rationale for depreciation recapture.

Q: On January 1, year 1, Dave received 1,000

On January 1, year 1, Dave received 1,000 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $7 per share. Dave’s restricted shares will vest at the end o...