Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 29P
a.
To determine
Compute Person T’s recognized gain or loss and adjusted basis for the WC Land on January 4, 2019.
b.
To determine
Compute Person L’s recognized gain or loss and adjusted basis for the EC Land on January 4, 2019.
c.
To determine
Compute Person L’s recognized gain or loss from the September 1, 2020 sale.
d.
To determine
Explain the effect of Person L’s 2020 sale have on Person T.
e.
To determine
Write a letter to Person T suggesting her of the tax consequences of the given exchange.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2019, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a two acre property in Texas with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a one acre property in Arkansas with a fair market value of $5,500 and cash of $500. Owen’s adjusted basis in the land he exchanges is $2,500. In March 2020, Owen sells the Texas land to a third party for $5,800.
Required: Go to the IRS website (www.irs.gov). Locate and review Publication 544, Chapter 1, Nontaxable Exchanges. Please explain and calculate the amount of Owen and Lisa’s gain recognition for 2019. Also determine the effect, if any, of the subsequent sale in 2020.
Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2020, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a 2 acre of property in Texas with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a 1 acre property in Arkansas with a fair market value of $5,500 and cash of $500. Owen’s adjusted basis in the land he exchanges is $2,500. In March 2021, Owen sells the Texas land to a third party for $5,800. Required:
Go to the IRS website. Locate and review Publication 544, Chapter 1, Nontaxable Exchanges. Write a file memorandum stating the amount of Owen and Lisa’s gain recognition for 2020. Also determine the effect, if any, of the subsequent sale in 2021.
ASAP!
Danny owns a home in Philadelphia. His company transfers him to Miami on March 9, 2020, and he sells his house in Philadelphia in early April. He purchases a new home in Miami on April 2, 2020. On December 20, Danny's company transfers him to Albany. In January 2021, he sells the Miami home and purchases a new home in Albany. Despite the fact that multiple sales have occurred within a two year period, § 121 benefits can be used on the sale of the second home.
Chapter 15 Solutions
Individual Income Taxes
Ch. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - LO.2 Melissa owns a residential lot in Spring...Ch. 15 - LO.2 Ross would like to dispose of some land he...Ch. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQ
Ch. 15 - Prob. 11DQCh. 15 - LO.3 Reba, a calendar year taxpayer, owns an...Ch. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - Prob. 15DQCh. 15 - Prob. 16CECh. 15 - Prob. 17CECh. 15 - Prob. 18CECh. 15 - Prob. 19CECh. 15 - LO.3 On June 5, 2019, Brown, Inc., a calendar year...Ch. 15 - LO.3 Camilos property, with an adjusted basis of...Ch. 15 - Prob. 22CECh. 15 - Prob. 23CECh. 15 - Prob. 24CECh. 15 - Prob. 25CECh. 15 - Prob. 26CECh. 15 - Prob. 27PCh. 15 - Prob. 28PCh. 15 - Prob. 29PCh. 15 - Prob. 30PCh. 15 - Prob. 31PCh. 15 - Prob. 32PCh. 15 - Prob. 33PCh. 15 - Ed owns investment land with an adjusted basis of...Ch. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37PCh. 15 - Prob. 38PCh. 15 - Prob. 39PCh. 15 - Prob. 40PCh. 15 - LO.3 Howards roadside vegetable stand (adjusted...Ch. 15 - Prob. 42PCh. 15 - Prob. 43PCh. 15 - Prob. 44PCh. 15 - Prob. 45PCh. 15 - Prob. 46PCh. 15 - What are the maximum postponed gain or loss and...Ch. 15 - Prob. 48PCh. 15 - Prob. 49PCh. 15 - Prob. 50PCh. 15 - Prob. 51PCh. 15 - Prob. 52PCh. 15 - Prob. 53PCh. 15 - Prob. 54PCh. 15 - Prob. 55PCh. 15 - Prob. 56PCh. 15 - Devon Bishop, age 45, is single. He lives at 1507...Ch. 15 - Prob. 1RPCh. 15 - Prob. 2RPCh. 15 - Taylor owns a 150-unit motel that was constructed...Ch. 15 - Prob. 6RPCh. 15 - Prob. 1CPACh. 15 - Susie purchased her primary residence on March 15,...Ch. 15 - Chad owned an office building that was destroyed...Ch. 15 - Prob. 4CPACh. 15 - Marsha exchanged land used in her business in...Ch. 15 - Prob. 6CPACh. 15 - Prob. 7CPA
Knowledge Booster
Similar questions
- Mamie Hanson converts her principal residence into a rental property. This property had cost $850,000 several years ago. It is converted on January 1, 2019 and, at that time, it is estimated that the value of the property has increased to $ 1,100,000. At this time the value of the land is unchanged at $400,000. Provided her rental income before CCA is more than this amount, what is the maximum CCA that Mamie can claim for 2019? A. $48,000. B. $32,000. C. $44,000. D . $22,000arrow_forwardOne of Courtney’s clients was interested in building a shopping center on a tract of land she owned in Lincoln County. Courtney inherited the property from her uncle when he died on June 6, 1999. At that time, the land was valued at $40,000. It has since been rezoned for commercial use and has a current value of $200,000. On February 10, 2019, Courtney exchanged the Lincoln parcel for a similar tract in Minnehaha County worth $190,000 and cash of $10,000. On September 2, 2019, Courtney sold a tract of land in McCook County to a farmer who owned the adjoining property. The land was inherited from the same uncle who died in 1999 and was valued at $30,000 on June 6, 1999. Under the terms of the sale, Courtney received cash of $20,000 and a note receivable to be paid in four equal installments at 1-year intervals from the date of sale. Each note calls for the payment of $25,000 plus simple interest of 8%. To the extent allowed by law, Courtney wants to defer recognition of gain for as…arrow_forwardGenevieve bought a condo in Colorado for her personal use in 2018. She paid $250,000 at the time of sale. After a good-faith effort, it was determined that none of the cost was allocable to the land. In 2021, she replaced the furnace and air conditioning system for a total cost of $10,000. In 2022, she converted the property to a rental property. At the time of the conversion, the fair market value of the property was $300,000. What is the basis for depreciation of the condo?arrow_forward
- Mr. Espiritu is a resident Filipino citizen. He purchased a parcel of land in Makati City in 1970 at a consideration of P1 Million. In 2021, the land , which remained undeveloped and idle, had a fair market value of P20Million. Mr. Ayala, another Filipino citizen, is very much interested in the property and he offered to buy the same for P20 Million. The Assessor of Makati City re-assessed in 2021 the property at P10 Million. Should Mr. Espiritu agree to sell the land to Mr. Ayala in 2022 for P20 Million, subject to the condition as stated in the Deed of Sale that the buyer shall assume the capital gains tax thereon, how much is the income tax due on the transaction?arrow_forwardIn June 2020, Sue exchanges a sport-utility vehicle (adjusted basis of $105,440; fair market value of $131,800) for cash of $19,770 and a pickup truck (fair market value of $112,030). Both vehicles are for business use. Sue believes that her basis for the truck is $112,030. Is Sue correct? Why or why not? As part of your response, compute Sue’s realized gain or loss (and recognized gain or loss, if any) on the exchange. Yes . She must treat the transaction as a regular sale or exchange . Therefore the basis of the new property is $________________ and Sue has a gain recognized gain of $_______________.arrow_forward1. On March 10, 2021, Juan sold land (adjusted basis = $150,000) to Richard for its FMV of $130,000. Juan had purchased the land in 2009 as an investment but now is having cash flow issues and decided not to wait any longer for market conditions to improve. Richard is the husband of Juan’s sister, Maria. Richard and Maria have been married for many years and live in the same state (as does Juan). How much of the loss can Juan deduct in the current year if he has no other capital transactions and his taxable income without considering this transaction is $75,000? If some or all of the loss is not deductible in 2021, what happens to the non-deductible portion? Consider your tax knowledge, court cases that you are familiar with, and IRC §267. Be sure to explain your reasoning as well as any assumptions you make.arrow_forward
- The Lyns live in their own home at 40 Cavin Ave, on which they have a mortgage balance of $2,000,000. This property has been appraised at $8,500,000 and is now up for sale at its current market value. A purchaser has been identified but the proceeds from the sale is not due to be paid to the Lyns until November 30, 2020. In the meantime the Lyns have contracted to purchase a new home at Wex Haven for $17,000, 000, although this property is valued at only $16,000,000. The sale agreement on this property requires a deposit of 20% on signing which will take place on June 1, 2020, with the balance which will not be covered by a mortgage, payable in 30 days after signing. Based on their high salaries, North Caribbean Building Society have pre-approved the Lyns for a 25-year mortgage of 75% of purchase price or value, whichever is less,up to a maximum of $20,000,000. This will attract an interest rate of 5.50% per annum with monthly compounding and will be disbursed on September…arrow_forwardThe Lyns live in their own home at 40 Cavin Ave, on which they have a mortgage balance of $2,000,000. This property has been appraised at $8,500,000 and is now up for sale at its current market value. A purchaser has been identified but the proceeds from the sale is not due to be paid to the Lyns until November 30, 2020. In the meantime the Lyns have contracted to purchase a new home at Wex Haven for $17,000, 000, although this property is valued at only $16,000,000. The sale agreement on this property requires a deposit of 20% on signing which will take place on June 1, 2020, with the balance which will not be covered by a mortgage, payable in 30 days after signing. Based on their high salaries, North Caribbean Building Society have pre-approved the Lyns for a 25-year mortgage of 75% of purchase price or value, whichever is less,up to a maximum of $20,000,000. This will attract an interest rate of 5.50% per annum with monthly compounding and will be disbursed on September…arrow_forwardThe Lyns live in their own home at 40 Cavin Ave, on which they have a mortgage balance of $2,000,000. This property has been appraised at $8,500,000 and is now up for sale at its current market value. A purchaser has been identified but the proceeds from the sale is not due to be paid to the Lyns until November 30, 2020. In the meantime the Lyns have contracted to purchase a new home at Wex Haven for $17,000, 000, although this property is valued at only $16,000,000. The sale agreement on this property requires a deposit of 20% on signing which will take place on June 1, 2020, with the balance which will not be covered by a mortgage, payable in 30 days after signing. Based on their high salaries, North Caribbean Building Society have pre-approved the Lyns for a 25-year mortgage of 75% of purchase price or value, whichever is less, up to a maximum of $20,000,000. This will attract an interest rate of 5.50% per annum with monthly compounding and will be disbursed on…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT