What is the adjusted basis in the home?
Guthrie purchased his home for $300,000. As a sole proprietor, he operates a certified public accounting practice in his home. For this business, he uses one room exclusively and regularly as a home office. In Year 1, $1,450 of depreciation expense on the home office was deducted on his income tax return. In Year 2, Guthrie ...continues
What is Lolita's cost basis in each asset?
Lolita purchases a business for $650,000. The fair market value of the assets of the business is as follows: Equipment $ 350,000 Building 250,000 What is Lolita's co ...continues
Garnet, Inc., owns a delivery truck which initially cost $30,000. After depreciation of $15,000 had been deducted, the truck was traded-in on a new truck that cost $40,000. Garnet was required to pay the car dealer $20,000 in cash. What is Garnet’s basis for the new truck? a. $0. b. $35,000. c. $40,000. ...continues
Paul exchanges a business machine, which has an adjusted basis of $50,000, for a new machine worth $40,000. In addition, he receives cash of $20,000. What is the recognized gain or loss and the basis of the new machine? a. $0 and $30,000. b. $0 and $40,000. c. $10,000 and $40,000. d. $10,000 and $50,000. e ...continues
What is the recognized gain or loss?
Manuel exchanges a rental house at the beach with an adjusted basis of $150,000 and a fair market value of $125,000 for a rental house at the mountains with a fair market value of $100,000 and cash of $25,000. What is the recognized gain or loss? a. $0. b. $100,000. c. $25,000. d. ($25,000). e. ...continues
Boston exchanges a machine used in his trade or business for another machine.
Boston exchanges a machine used in his trade or business for another machine. In addition, he gives shares of Intel stock which have a fair market value of $27,000 and a basis of $13,000. The old machine has an adjusted basis of $30,000 and the new machine has a fair market value of $80,000. What is the recognized gain or los ...continues
What is the recognized gain or loss and how is it classified?
On August 10, 2003, an investor purchased 1,000 shares of Mauve Corporation for $30,000. On January 2, 2004, the stock became worthless. What is the recognized gain or loss and how is it classified? a. $3,000 STCL. b. $30,000 STCL. c. $3,000 LTCL. d. $30,000 LTCL. e. None of the above.
Rachel operates a hardware store as a sole proprietorship. Which of the following items are capital assets in the hands of Rachel? a. The vacant lot next to her store used as a parking lot for customers. b. Sixteen tool boxes that have been in inventory for over a year. c. A note receivable that was g ...continues
Rica purchased for $4,500 a $5,000 bond when it was issued two years ago. Rica amortized $250 of the original issue discount and then sold the bond for $4,875. Which of the following statements is correct? a. Rica has $125 of long-term capital gain. b. Rica has $250 of long-term capital gain. c. Rica has $3 ...continues
On July 1, 2004, Marco purchased an option to buy 1,000 shares of Surfing, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Marco decided to let the option lapse as of December 1, 2004. On his 2004 in ...continues
