Homework 5 Solution

Tax 4001 Spring 2011 Homework Set #5 Solution PAGE 1 # 1 a) Amount Realized$37,500 Basis(45,000) True Loss(7,500) Certain Loss$0 accordingly single use asset c. The true privation is $0. b) Corresponding as (a). Like-kind change rules do not direct to single-use wealth c)Her certain privation is $0. Since the arrange of the action is a robbery, the certain privation is the lesser of the adjusted cause or the unblemished chaffer appreciate of the asset, cheap by the protection pay that she current (see Chapter 6). Therefore, the occasion for the robbery privation inference on single use wealth is not confer-upon in this predicament accordingly the protection pay current of $37,500 resembling the unblemished chaffer appreciate of $37,500. #2 a. amt trueized$65,000 "loss" cause 76,000 Certain Loss(11,000) b. $0. The pay of $68,000 are among the constitute cause of $80,000 and the privation cause of $60,000. Therefore, neither constitute nor privation is certain. #3 a. $225,000 b. $200,000 (note: singly the erection can be decryd) c. $225,000 Cause for the constitute is adjusted cause d. She would be ameliorate off to hawk the progeny and buy another one. Because the progeny is her single sojourn, she could reject the constitute on sale. Then she would be conducive to decry the new progeny at a conspicuous cause #4 a. Amt. Realized$265,000 Adj Cause 175,000 True Gain90,000 b. Recoginzed Constitute is $65,000 which is the less of trueized constitute or boot current. c. Adjusted cause of Land| $175,000| Constitute Recognized| 65,000| Boot| (65,000)| Adj Cause of Building| 175,000| . Tax 4001 Spring 2011 Homework Set #5 Solution PAGE 2 . #5 Amt. Realized$1,235,000 [125000 + 900000 + 210000] Less: Cause of Apt850,000 True Constitute 385,000 b. Recog Gain$335,000 Cash plus mortgage Postponed Gain$50,000 . | | Cause of Apt Bldg| $850,000| + constitute certain| 335,000| Less: Boot current| (335,000)| Cause of Office Bldg| $850,000| #6| | Cost| $200,000| Legal Fees| $21,500| Streets and Sewers| $700,000| Basis| $921,500| #7 Cause b4 mischance$10,000 Protection pay 13,500 Mischance Gain3,500 Cause following protection - #8 FIFO manner used to avow which divides were sold, accordingly Tommy Is treated as having sold 100 of the divides he purchased on 10/16/06 Per Divide Cause = $7500/125 divides = $ X Number of Shares Sold (100) =$ 60 6,000 per divide Cause of Shares Sold Sales Procceds| 18,000| Less: Basis| (6,000)| LTCG| $ 12,000| Tax 4001 Spring 2011 Homework Set #5 Solution PAGE3 30. | a. | Realized constitute- $9,000 [($12,000 unblemished chaffer appreciate of new asset+ $4,000 boot current)-$7,000 adjusted cause of old asset]. Certain constitute= $4,000. | | | Postponed constitute= $5,000. | | | New cause= $7,000 ($12,000 unblemished chaffer appreciate of new asset- $5,000 postponed constitute). | | b. | Realized privation = $1,000. | | | Certain privation= $-0-. | | | Postponed privation= $1,000. | | | New cause= $16,000 ($15,000 unblemished chaffer appreciate of new asset+ $1,000 postponed privation). | | c. | Realized privation = $1,500. Certain privation= $-0-. | | | Postponed privation= $1,500. | | New cause= $9,500 ($8,000 unblemished chaffer appreciate of new asset+ $1,500 postponed privation). | | d. | Realized constitute= $10,000. Certain constitute = $-0-. | | | Postponed constitute= $10,000. | | | New cause = $22,000 ($32,000 unblemished chaffer appreciate of new asset - $10,000 postponed| | | constitute). | | e. | Realized constitute = $2,000. | | | Certain constitute= $1,000. | | | Postponed constitute= $1,000. | | | New cause= $10,000 ($11,000 unblemished chaffer appreciate of new asset- $1,000 postponed constitute). | | f. | Realized privation = $2,000. Certain privation= $-0-. | | | Postponed privation= $2,000. | | | New cause= $10,000 ($8,000 unblemished chaffer appreciate of new asset+ $2,000 postponed privation). Tax 4001 Spring 2011 Homework Set #5 Solution PAGE4 32. a. Since the proprietor is an proprietor-investor, the taxpayer use examination applies. Replacing the wareprogeny that is rented to incongruous tenants delay a shopping mall that is rented to incongruous tenants in a incongruous colonization qualifies as vindication wealth. Amount trueized Adjusted cause Realized constitute $ 700,000 (470,000) $ 230,000 Certain constitute $ -0- The cause for the vindication wealth is: Consume Postponed constitute Cause $ 700,000 (230,000) $ 470000 b. Since the proprietor is an proprietor-user, the administrative use examination applies. Replacing the wareprogeny used in his trade delay another wareprogeny in a incongruous avow which is to be used in his trade qualifies as vindication wealth subordinate the administrative use examination. Amount trueized Adjusted cause Realized constitute Certain constitute $ 400,000 (300,000) $ 100,000 $ -0- The cause for the vindication wealth is: Consume Postponed constitute Cause $ 400,000 (100,000) $ 300,000 c. Since Swallow was an proprietor-user of the erection, the administrative use examination applies. Thus, Swallow's use of the vindication wealth and of the involuntarily converted wealth must be the corresponding. Since Swallow's use of the four-unit room erection is incongruous from the use of the erection in its retail trade, the room erection does not render-capable as vindication wealth. Amount trueized Adjusted cause Realized constitute Certain constitute $ 300,000 (250,000) $ 50,000 $ 50,000 The cause for the room erection is its consume of $300,000. d. Not competent vindication wealth accordingly they are proprietor-users so administrative-use examination applies. Thus they must avow their trueized constitute of $30,000 and their cause in the duplex is $200,000.