ACC Part VI (Week ) Assignment - Will S. Frost and Mari N Frost

For the Part IV (Week 7) assignment, you are asked to do the following:

• Use the Parts I, II, and III assignments you completed previously.
• Correct your Part III assignment mistakes, if any, based on the solution you were provided by your instructor at the end of Week 6.
• Complete the following additional paragraph items: 6 – 9
• Please also examine the bullets on requirements to add that may pertain to these paragraphs.
• State any assumptions you are making in a separate memorandum attached to the return.

Save your file as Your Last Name - formname.pdf (e.g., Smith-f2106.pdf), and submit it to your instructor via the Week 7 Assignments Dropbox.

6. One of Mari’s clients was interested in building a shopping center on a tract of land Mari owned in Lincoln County. Mari inherited the property from her uncle when he died on June 6, 1993. At that time, the land was worth $40,000. It has since been rezoned for commercial use and has a current value of $200,000. On February 10, 2013, Mari exchanged the Lincoln County parcel for a similar tract in Minnehaha County (worth $190,000) and cash of $10,000.

7. On September 2, 2013, Mari sold a tract of land in McCook County to a farmer who owned the adjoining property. The land was inherited from the same uncle who died in 1993 and was worth $30,000 on June 6, 1993. Under the terms of the sale, Mari received cash of $20,000 and four notes receivable (to be paid at one-year intervals) that each call for the payment of $25,000 plus simple interest of 8%. To the extent allowed by law, Mari wants to defer recognition of gain as long as possible.

8. In early 2012, Will learned that one of his restaurant managers, Carrie Jones, was suffering domestic abuse at the hands of her husband Steve. When Steve also started to abuse their 5-year-old daughter, Carrie decided it was time for her and her daughter to get away. Before they left on April 14, 2012, Will loaned Carrie $5,500 to help them relocate. Will had her sign an interest-free note due in one year. Will never heard from Carrie again. In late 2013, Will learned that Steve tracked down Carrie and their daughter and killed both of them before committing suicide. Given these tragic circumstances, Will has no expectation that the loan will ever be repaid.

9. On August 5, 2011, Will purchased 1,000 shares of Farmer’s Markets America (FMA) common stock for $16 a share as part of its initial public offering. The corporation was formed to establish and operate farmers’ markets in mid-size cities throughout the United States. Although some market locations were profitable, the venture as a whole proved to be a failure. In November 2013, FMA’s remaining assets were seized by its creditors, and FMA stock became worthless.