Homework 5 Solution

Assessment 4001 Spring 2011 Homework Set #5 Solution PAGE 1 # 1 an) Amount Realized$37,500 Basis(45,000) Real Loss(7,500) Recognized Loss$0 on the grounds that individual use resource c. The genuine misfortune is $0. b) Same as (a). Like-kind trade rules don't matter to individual use resources c)Her perceived misfortune is $0. Since the type of the exchange is a burglary, the perceived misfortune is the lesser of the balanced premise or the honest evaluation of the benefit, diminished by the protection continues that she got (see Chapter 6).Therefore, the open door for the robbery misfortune derivation on close to home use property is absent for this situation in light of the fact that the protection continues got of $37,500 equivalent the honest assessment of $37,500. #2 a. amt realized$65,000 â€Å"loss† premise 76,000 Recognized Loss(11,000) b. $0. The returns of $68,000 are between the addition premise of $80,000 and the misfortune premise of $60,000. Along these lines, n either increase nor misfortune is perceived. #3 a. $225,000 b. $200,000 (note: just the structure can be deteriorated) c. $225,000 Basis for the addition is balanced premise d. She would be in an ideal situation to sell the house and purchase another one.Because the house is her own habitation, she could avoid the addition on special. At that point she would have the option to deteriorate the new house at a higher premise #4 a. Amt. Realized$265,000 Adj Basis 175,000 Real Gain90,000 b. Recoginzed Gain is $65,000 which is the less of acknowledged addition or boot got. c. Balanced premise of Land| $175,000| Gain Recognized| 65,000| Boot| (65,000)| Adj Basis of Building| 175,000| . Assessment 4001 Spring 2011 Homework Set #5 Solution PAGE 2 . #5 Amt. Realized$1,235,000 [125000 + 900000 + 210000] Less: Basis of Apt850,000 Real Gain 385,000 b. Recog Gain$335,000 Cash in addition to contract Postponed Gain$50,000 . | Basis of Apt Bldg| $850,000| + gain recognized| 335,000| Less: Boot rece ived| (335,000)| Basis of Office Bldg| $850,000| #6| | Cost| $200,000| Legal Fees| $21,500| Streets and Sewers| $700,000| Basis| $921,500| #7 Basis b4 casualty$10,000 Insurance continues 13,500 Casualty Gain3,500 Basis after protection †#8 FIFO strategy used to figure out which offers were sold, subsequently Tommy Is treated as having sold 100 of the offers he bought on 10/16/06 Per Share Basis = $7500/125 offers = $ X Number of Shares Sold (100) =$ 60 6,000 for every offer Basis 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 addition $9,000 [($12,000 honest evaluation of new asset+ $4,000 boot got)- $7,000 balanced premise of old asset]. Perceived gain= $4,000. | Postponed gain= $5,000. | New basis= $7,000 ($12,000 honest evaluation of new resource $5,000 delayed addition). | b. | Realized misfortune = $1,000. | Recognized loss= $-0-. | Postponed loss= $1,000. | New basis= $16, 000 ($15,000 honest assessment of new asset+ $1,000 delayed misfortune). | c. | Realized misfortune = $1,500. Perceived loss= $-0-. | Postponed loss= $1,500. | New basis= $9,500 ($8,000 honest evaluation of new asset+ $1,500 delayed misfortune). | d. | Realized gain= $10,000. Perceived addition = $-0-. | Postponed gain= $10,000. | New premise = $22,000 ($32,000 honest evaluation of new resource †$10,000 postponed| | gain). | e. | Realized addition = $2,000. | Recognized gain= $1,000. | Postponed gain= $1,000. | New basis= $10,000 ($11,000 honest assessment of new resource $1,000 delayed addition). | f. | Realized misfortune = $2,000. Perceived loss= $-0-. | Postponed loss= $2,000. | New basis= $10,000 ($8,000 honest evaluation of new asset+ $2,000 delayed misfortune). Assessment 4001 Spring 2011 Homework Set #5 Solution PAGE4 32. a. Since the proprietor is a proprietor financial specialist, the citizen use test applies. Supplanting the distribution center that is leased to diff erent inhabitants with a shopping center that is leased to different occupants in an alternate area qualifies as substitution property. Sum acknowledged Adjusted premise Realized increase $ 700,000 (470,000) $ 230,000 Recognized addition $ - 0-The reason for the substitution property is: Cost Postponed gain Basis $ 700,000 (230,000) $ 470000 b. Since the proprietor is a proprietor client, the utilitarian use test applies.Replacing the distribution center utilized in his business with another stockroom in an alternate state which is to be utilized in his business qualifies as substitution property under the useful use test. Sum acknowledged Adjusted premise Realized addition Recognized increase $ 400,000 (300,000) $ 100,000 $ - 0-The reason for the substitution property is: Cost Postponed gain Basis $ 400,000 (100,000) $ 300,000 c. Since Swallow was a proprietor client of the structure, the utilitarian use test applies. In this manner, Swallow's utilization of the substitution proper ty and of the automatically changed over property must be the same.Since Swallow's utilization of the four-unit high rise is unique in relation to the utilization of the structure in its retail business, the apartment complex doesn't qualify as substitution property. Sum acknowledged Adjusted premise Realized addition Recognized increase $ 300,000 (250,000) $ 50,000 $ 50,000 The reason for the high rise is its expense of $300,000. d. Not qualified substitution property since they are proprietor clients so useful use test applies. In this way they should perceive their acknowledged addition of $30,000 and their premise in the duplex is $200,000.