tax problems - questin

20. LO.8 An individual taxpayer had a net § 1231 loss in 2013. Could any of this loss be treated as a long-term capital loss? Why or why not?

21. LO.8 Steven established a sole proprietorship in 2008. He sold § 1231 assets at a loss in 2011 and 2012. He had only sold § 1231 assets at a gain before 2011. In 2013, he could sell a § 1231 asset at a gain and would like to have the gain taxed as a long-term capital gain. What issue is Steven facing?

22. LO.8 Review Examples 50 and 52 in the text. In both examples, the taxpayer’s AGI is $129,400 even though in Example 52 there is $700 of nonrecaptured § 1231 loss from 2012. Explain why the two AGI amounts are the same.

23. LO.8 A taxpayer owns depreciable business real property held for the short-term holding period. What would have to be true for the real property to generate a § 1231 loss when it is sold?

24. LO.8 A depreciable business dump truck has been owned for four years and is no longer useful to the taxpayer. What would have to be true for the disposition of the dump truck to generate at least some § 1231 loss?

25. LO.7, 8, 9 Sissie owns two items of business equipment. They were both purchased in 2009 for $100,000, both have a seven-year recovery period, and both have an adjusted basis of $37,490. Sissie is considering selling these assets in 2013. One of them is worth $60,000, and the other is worth $23,000. Because both items were used in her business,
Sissie simply assumes that the loss on one will be offset against the gain from the other and that the net gain or loss will increase or reduce her business income. Is she correct?
Explain.

26. LO.7, 9 If depreciable equipment used in a business is sold at a recognized gain on
July 10, 2013, and it was purchased on August 21, 2012, does § 1245 depreciation recapture apply to the asset? Explain.

27. LO.9 A retailer’s store is destroyed by a tornado, but is insured for its replacement cost. Consequently, the retailer has a $40,000 gain after receiving the insurance proceeds.
The store is not replaced because the retailer spends the insurance proceeds on additional inventory. What is the nature of the gain if the store originally cost $100,000 three years ago and had an adjusted basis of $82,000 at the time of its destruction?

28. LO.10 Nonresidential real estate leasehold improvements are sold at a loss. In what circumstances would the loss be subject to § 1250 depreciation recapture?

29. LO.10 An apartment building was acquired in 2005. 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?

30. LO.10 In the current year, an individual taxpayer has net long-term capital gain from disposition of capital assets and has unrecaptured § 1250 gain. What would the circumstances have to be for the unrecaptured § 1250 gain to be taxed at 25%?

31. LO.10 An individual taxpayer has $25,000 of § 1231 gain from the disposition of nonresidential real estate. Straight-line depreciation of $43,000 was deducted on the real estate. The taxpayer also has a § 1231 loss of $56,000 from the sale of equipment. How much of the § 1231 gain is taxed as unrecaptured § 1250 gain?

32. LO.9, 11 Mary receives tangible personal property as a gift. The property was depreciated by the donor, and Mary will also depreciate it. At the date of the gift, the property was worth more than the donor’s adjusted basis. What is the impact of these facts on
Mary when she sells the property at a gain several years after she acquired it?

33. LO.9, 11 Thomas receives tangible personal property as an inheritance from a decedent who died in 2013. The property was depreciated by the deceased, and Thomas will also depreciate it. At the date of the deceased’s death, the property was worth more than the deceased’s adjusted basis. What is the impact of these facts on Thomas when he sells the property at a gain several years after he acquired it?

34. LO.9, 11 Dino contributes to charity some tangible personal property that he had used in his business and depreciated. At the date of the donation, the property has a fair market value greater than its adjusted basis, but less than the original cost. What is the impact of these facts on Dino’s charitable contribution?

35. LO.9, 11 Desiree contributes to her wholly owned corporation some tangible personal property that she had used in her sole proprietorship business and depreciated. At the date of the contribution, the property has a fair market value greater than its adjusted basis. What is the impact of these facts on the corporation?

36. LO.9, 11 A corporation distributes a truck it has owned for three years to its sole shareholder. The shareholder will use the truck for personal use activity. The truck’s fair market value at the time of the distribution is greater than its adjusted basis, but less than its original cost. Does the corporation recognize a gain? If so, what is the character of the gain?

37. LO.12 A corporation distributes a truck it has owned for three years to its sole shareholder.
The shareholder will use the truck for business activity. The truck’s fair market value at the time of the distribution is greater than its adjusted basis, but less than its original cost. Does the corporation recognize a gain? If so, what is the character of the gain?