During 2020, Sandra Von Arb acquired a four-unit apartment building for $230,000. While it was her intention to operate the building as a rental property, one month after her purchase she received an unsolicited offer to purchase the building for $280,000. She accepts the offer. Should the $50,000 be treated as a capital gain or as business income? Justify your conclusion.
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During 2020, Sandra Von Arb acquired a four-unit apartment building for $230,000. While it was her intention to operate the building as a rental property, one month after her purchase she received an unsolicited offer to purchase the building for $280,000. She accepts the offer. Should the $50,000 be treated as a
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- In 2020, José purchased a house for $325,000 ($300,000 relates to the house; $25,000 relates to the land). He used the house as his personal residence. In March 2023, when the fair market value of the house was $400,000, he converted the house to rental property. If required, round your answers to the nearest dollar. Click here to access depreciation tables in the textbook. a. José's basis for cost recovery for the property is $ 300,000 b. Under MACRS, the cost recovery period for residential rental real estate is 27.5 years, and it is subject to the mid-month ✓ convention. c. The cost recovery for 2023 is $ Feedback x. Check My Work If personal-use assets are converted to business (or income-producing) use, the basis for cost recovery and for loss must be determined at the time the property is converted.Anna Osinski acquired a townhouse unit in 2019 for $120,000 (land $10,000, building $110,000). She bought the unit in order to rent it. By the end of 2021, the undepreciated capital cost of the building was $103,500. In August 2022, Anna decided to live in the unit herself. At that time, similar townhouses were selling for $136,000 (land $12,000, building $124,000). Prior to August, her 2022 net rental income before capital cost allowance was $1,000. In September 2022, Anna purchased, for rental purposes, a residential condominium unit for $145,000 (land $15,000, building $130,000). Between September and the end of the taxation year, the condo earned net rentals of $900 before capital cost allowance. Required: Determine the Change to Anna's 2022 net income for tax purposes as a result of the above activity. Change to net income $ 0Anna Osinski acquired a townhouse unit in 2020 for $132,000 (land $10,000, building $122,000). She bought the unit in order to rent it. By the end of 2022, the undepreciated capital cost of the building was $113,900. In August 2023, Anna decided to live in the unit herself. At that time, similar townhouses were selling for $149,600 (land $13,200, building $136,400). Prior to August, her 2023 net rental income before capital cost allowance was $1,100. In September 2023, Anna purchased, for rental purposes, a residential condominium unit for $159,500 (land $16,500, building $143,000). Between September and the end of the taxation year, the condo earned net rentals of $1,000 before capital cost allowance. Required: Determine the Change to Anna's 2023 net income for tax purposes as a result of the above activity. Rents condo Rents townhouse Recapture Less CCA Answer is not complete. Taxable Capital gains: 0 Change to net income
- In 2018, José purchased a house for $263,000. He used the house as his personal residence. In May 2021, when the fair market value of the house was $346,900, he converted the house to rental property. what is the cost recovery for 2021?In 2019, José purchased a house for $191,400. He used the house as his personal residence. In June 2022, when the fair market value of the house was $331,300, he converted the house to rental property. If required, round your answers to the nearest dollar. Click here to access depreciation tables in the textbook. a. José's basis for cost recovery for the property is $ b. Under MACRS, the cost recovery period for residential rental real estate is 27.5 mid-month ✔✓ convention. c. The cost recovery for 2022 is $ 5,510 X. 191,400 ✔. ✓ years, and it is subject to theTaryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500 Calculate both Indexation and Discount Capital Gain. Later on you need to advise which one will give you a better result.
- In February of 2023 during the preparation of Julia's 2022 return, you explained to her options for usingn either the section 179 deduction or special depreciation for the purchase of her 2022 assets. In her first few years in business, she was learning so much, depreciation was too confusing for her. when you showed her the tax savings she would receive to benefit her for 2022 , she understood how this might change her choices for additional larger assets she may purchase in 2023. If Julia decided to use special depreciation for the assets purchased in 2022, Julia's refund would increase by what amount ?In 2018, José purchased a house for $197,400. He used the house as his personal residence. In September 2021, when the fair market value of the house was $315,700, he converted the house to rental property. If required, round your answers to the nearest dollar. Click here to access depreciation tables in the textbook. a. José's basis for cost recovery for the property is $ b. Under MACRS, the cost recovery period for residential rental real estate is convention. c. The cost recovery for 2021 is $ years, and it is subject to theIN FEBRUARY of 2023, during the preparation of julia's 2022 return, you explained to her the options for using either the section 179 deduction of special depreciation for the purchases of her 2022 assets. in her first few years IN BUSINESS, SHE WAS LEARNING SO MUCH, DEPRECIATION WAS TOO CONFUSING FOR HER. WHEN YOU SHOWED HER THE TAX SAVINGS SHE WOULD RECEIVE TO BENEFIT HER FOR 2022. SHE UNDERSTAND HOW THIS MIGHT CHANGE HER CHOICES FOR ADDITIONAL LARGER ASSESTS SHE MAY PURCHASE IN 2023. SHE BOUGHT A TOTAL OF $3200 IN ASSESTS HER TAXABLE INCOME FOR 2022 IS $ 283,096 IF JULIA DECIDED TO USE SPECIAL DEPRECIATION FOR THE ASSESTS PURCHASED IN 2022. JULIA'S REFUND WOULD INCREASE BY WHAT AMOUNT?
- Dan wishes to purchase an apartment from which he can collect rent before making profit on the sale of the property in three years’ time. He intends to buy the property in July 2022 and sell it in July 2025. He has determined that he can afford to purchase a three-bedroom apartment costing $480,000 and has identified two suitable alternatives as follows; Address of property 1 Single St, Brisbane 32 Pam Ave, Brisbane Purchase price (including stamp duty & legal costs) $580,000 $580,000 Construction date built in 1971 built in 2001 Construction cost $47,000 $230,000 Depreciable assets (fillings) $7,000 $29,000 Remaining effective life (use Prime cost) 4 years 10 years Annual maintenance fees $4,500 $4,500 Annual council & water rates $3,000 $3,000 Annual interest on $400,000 mortgage $24,000 $24,000 Annual rental income $31,000 $31,000 Expected selling price in July 2025 $700,000 $700,000 In each case, the values of the fillings and construction costs have been verified by…During 2022, Mr. Richmond sold his two residences, in order to purchase a larger home in an expensive suburb. The following facts relate to these two residences: Date purchased Cost Sales Commission Paid Sale Proceeds City home 2013 $75,000 $20,000 $250,000 Cottage 2008 $18,500 $12,500 $200,000 Required: Determine Mr. Richmond’s net income for tax purposes as a result of the above information. Show all of your calculations.At the beginning of 2020, Emma owned two residential rental properties. During 2020 she sold Building 1 and purchased a new building (Building 3). Details related to the properties are as follows: Total rent received 20,000 Total expenses paid to earn rental income, excluding CCA 12,000 Building #1 opening UCC 72,000 Building #2 opening UCC 180,000 Proceeds of disposition on building #1 on April 30, 2020 120,000 Original cost of building #1 80,000 Cost of new rental building purchased on May 1, 2020 (land excluded) 250,000 Required: Compute the minimum rental income for Emma in 2020. Show your work!