CPA Reg R3

Question 1

When calculating capitalized expenditures is detailing a capitalized expense

Answer 1

No. it is part of repair and maintenance

Question 2

What basis would a company received when another company gifted a personal asset to the gifting company basis or FMV

Answer 2

At company who gave the gift basis. However if FMV is lower the basis than use FMV.

Question 3

For inheritance of property how much is considered taxable

Answer 3

None. inheritance are not taxable.

Question 4

If a company has a accounting policy to expense tangible property up to $8000 under the de minimis rule ( under $5K) also it has applicable F/S. If it purchase 3 pieces of equipment at $4K each how much can it deduct in the current year

Answer 4

$12K the 3 pieces of equipment were purchase at $4k each and under the policy and de minimus rule of $5k. If it does not have an applicable F/S, the de minimus is $2500 so the company could not deduct no for the $4 equipment.

Question 5

If a person stock basis is $40K and gift to son at FMV $30K. No gift tax is paid. son sales at $36K what is g/l

Answer 5

Zero. When gift is sold between Gifter basis and FMV, no g/l

Question 6

If Co. has avg gross receipts of $8.5m during y1 and y3. During y4 pays $9.2K in repairs and imprvments on owned building with unadj. basis of $700K cost. Under safe harbor rule can $9.2K be deducted

Answer 6

yes. Considered small business under $10M, unadj basis under $1M. Can deduct between $10K-$14K or 2% of unadj basis $700K. Over Safe harbor zero.

Question 7

If a person stock basis is $40K and gift to son at FMV $30K. No gift tax is paid. son sales at 50K what is g/l

Answer 7

$10 gain over basis. 50 - 40 = 10. If sold at 10, it would be 10 sold - 40 son basis with 30 loss

Question 8

If purchase land with $40K cash , assumed mortgage $50K and had paid insurance @ 2K what is basis

Answer 8

$40 cash + 50K mortgage a+ $2insurance exp or cost incurred to purcahse = $92k

Question 9

What is the basis for person inheriting property FMV or basis

Answer 9

FMV of death person

Question 10

What are the some of the realize (not taxed) but are not recognized (taxed) for tax purposes

Answer 10

Exclusion from tax: HIDE IT or WRAP
HIDE IT (GAINS)
Homeowner's Exclusion
Involuntary conversion (insurance beneficiary)
Divorce property settlement
Exchange of like-kind business real property (business) no BOOT
Installment sales
Treasury capital and stock
WRAP (LOSSES)
Wash sale losses
Related party losses and
Personal losses

Question 11

Company A enter into an like exchange ; building for Land. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Company A received was at FMV $280K plus received cash $70K from other Company B.
Does the qualify as like-kind exchange:
what is the realized gain for Co. A:

Answer 11

Does the qualify as like-kind exchange: Yes
what is the realized gain for Co. A: 
 what did we get
Cash (boot)            $70K
FMV land               $280:
                               $350K
CR: what did we give up
Buildg@ basis                $300K
 less Dep                          (80)
Net give up                      $220

Comp A realize(not taxed) : $350-220= $130

Question 12

Company A enter into an like exchange ; building for building. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Building received was at FMV $280K plus received cash $70K from other Company B.
What is the recognized (taxed) for Comp A

Answer 12

Recognized is Boot (cash) 
Does the qualify as like-kind exchange: Yes
what is the realized gain for Co. A: 
 what did we get
Cash (boot)            $70K
FMV land               $280:
                               $350K
CR: what did we give up
Buildg@ basis                $300K
 less Dep                          (80)
Net give up New basis      $220

Comp A realize(not taxed) : $350-220= $130
Recognized= $70K boot

Question 13

Company A enter into an like exchange ; building for building. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Building received was at FMV $280K plus received cash $70K from other Company B.
What is the total basis in property and cash received fpr Company A

Answer 13

What is the total basis in property and cash received fpr Company A
 what did we get
Cash (boot)            $70K
FMV land               $280:
                               $350K
CR: what did we give up
Buildg@ basis                $300K
 less Dep                          (80)
NBV                              $220

Def g/l: realize gain 130- boot rec’d 70= 60 def gain

New basis rec’d fmv 280- def gain 60+ def loss 0=
$220K new basis

Question 14

Company A enter into an like exchange ; building for building. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Building received was at FMV $280K plus received cash $70K from other Company B.
what is the recognized gain fro Company B
What is Company basis in property received

Answer 14

No Cash or boot received = no recognized gain = 0

Co B gave land with FMV $280K +cash of $70K = $350K

Question 15

A company has an like exchange their adj basis was $20,000; new property was $10,000 plus rec $3,000 what is the tax basis

Answer 15

This like like exchange result in a loss with boot. So I take the Adj basis $20 - boot $3 = tax basis $17K

Question 16

When an taxpayer per stock on 12/15 for 100 shares at $15K; Purch 12/31 addition 100shs for $13K and sales on 1/3//y2 100shs for $13K that were purch on 12/15 what is the deduct loss and in what yr

Answer 16

No loss in year 1 because no sale. In Yr 2, this is a wash sale meaning purch another $13K stock within 30days before sale of 12/15 stock results in zero deduct loss for yr2.

Question 17

one requirement for like kind exchange it is simular assets and

Answer 17

must be real property not stocks or bonds

Question 18

When business property is damaged and business submits a claim, what amount should the involuntary loss from building be detrmine

Answer 18

by Basis (or fmv if lower than basis) + additional cost; i.e. clean up.

Question 19

If stock purchase are not within 30 days, are they considrer wash sales

Answer 19

No and result in capital loss

Question 20

Co loss building due to fire. Original basis was $75K . Insurance proceeds was $195K, new building is $167K Co elects the minimum gain. What is the new basis

Answer 20

New basis= new bldg - gain not recognize

Insurance proceeds        195  
less orignal basis              75
=realized gain                  120
less Recognized gain
195-167 new building        28 
Gain not recogized        92 involuntary

Cost new 167
less not recogn 92
Basis new bldg 75

Question 21

In like exchange: Gain when boot received:

In like exchange: What is the new basis:

Answer 21

FMV received 35 + boot cash 5 = 40 received
Less: Cost 30 - depr 5 = 25 NBV
Realized Gain 15
Recognized(lesser 15 of gain and boot 5)
Recognize gain 5. Realized deferred gain 10
New Basis:
FMV received 35- deferred gain 10+ Deferred loss 0 = 25 Basis

Question 22

In like exchanges are losses recognize

Answer 22

No. the are only realized and deferred

Question 23

In like exchange what is the realized gain when no boot

and what is the new basis

Answer 23

Gave away Cost 35 - depr 18 = 17 nbv
Got FMv 20 and no boot = 20fmv
Realized gain 3
Recognize lesser of gain 3 and 0 boot = 0 recognized
What is deferred gain realized
Deferred gain 3 - recognized 0 = 3 deferred
Basis: FMV rec 20 - def gain 3+ def loss 0 = 17 basis

Question 24

Like-kind exchange with realize loss

What is basis

Answer 24

Gave away Cost 35 - Accum dep 12 = 23 nbv
less got FMV 20 + no boot = 20
realize loss 3
Recognized g/l = 0 can not recognize loss
What is the deferred g/l= deferred loss 3 - loss recognize 0 = 3 def loss
New Basis: FMV 20+ def loss 3 - def gain 0 = 23 new basis

Question 25

Like -inkind exchange with boot received greater than gain realize & what is new basis

Answer 25

Gave away Cost 35 - accum dep 18 = 17 nbv got FMV 16.5 + 3.5 boot cash = 20 Realize gain = 3 Gain recognized: lessor of gain 3 and boot 3.5 Recognize 3 Def gain= realize 3 and recognized gain 3 = 0 deferred gain What is new basis: FMV 16.5 + def loss 0 - def gain 0 = 16.5 new basis

Question 26

Like exchange: what is boot received less than gain realized | & what is new basis

Answer 26

Gave away cost 35-accum dep 18 = 17 nbv got FMV 17.5 + 2.5 boot = 20 Realize gain 3 recognized gain lessor of realize 3 and boot 2.5= 2.5 recognized what is deferred gain= realize gain 3 - recognize 2.5 = .5 def gain New basis= FMV 17.5+def loss 0-def gain.5= 17 new basis.

Question 27

Like exchange what is realize gain when boot is paid | & what is new basis

Answer 27

Gave away cost 35 - accum dep 18 +cash 2 = 19nbv got fmv 22+ no boot = 22 realize gain 3 Recognize= lessor of realize gain 3 or boot 0 amount recognize = 0 Deferred gain= realize 3- recognize 0 = def gain 3 Basis: FMV 22 + deferred loss 0 - def gain 3 = 19

Question 28

Like exchange is best on real property

Answer 28

yes. not partner interest, convertable bonds, pref stocks

Question 29

Like Exchange when non like exchange included as boot what is realize, recognized and new basis

Answer 29

Gave away cost 35 - accum dep 18 = 17 nbv fmv 16.5 + 3.5 non like exchng non boot = 20 realize gain = 3 3 Recogn less of realize gain 3 and non like boot 3.5 recognize 3 New basis: NBv 17+gain recogn 3-boot 3.5= 16.5. Since it is non like use nbv 17 instead on fmv 16.5 getting.

Question 30

Like Exchange when boot is assum liab of other party what is realize, recognized and new basis

Answer 30

Give away cost 35 - accu dep 18 = 17 nbv getting fmv 22- 2 liab = 20 Amount realize gain 3 amount recognized is lesso r of realize gain and boot received 0 amount recognized 0 n New basis = nbv (since non boot) 17+ assumed liab2= 19 new basis

Question 31

Like exchange when other party assum liab as boot what is realize g/l, recogn g/l and new basis

Answer 31

Give away 35- accum depr 18 = 17 nbv getting 17.5 + 2.5 liab off books 20 realize gain 3 3 g/l recognized lessor of 3 and 2.5 2.5 recognized New basis 17 nbv+2.5 g recogn- 2.5 boot= 17

Question 32

Like exchange when you assum liab of other party and other party assum liab as boot what is realize g/l, recogn g/l and new basis

Answer 32

Cost 35 - accum dep 18 +1 liab assum = 18 nbv fmv 17.5 +liab assum 3.5 boot = 21 amt realize 3 amount recogn diffe 3.5 - 1 =2.5 lessor of real gain and diffe 2.5 2.5 New basis= nbv 18+amt recog2.5- 3.5 boot 17

Question 33

When provided services and payment in form of stock what wold your basis be person gave you stock or fmv when stock give to you

Answer 33

FMV

Question 34

Does Boot consist of cash and debt cancellation

Answer 34

Yes in a inkind exchange

Question 35

Like exchange on rental home property when there is exchange of debt and cash boot

Answer 35

Rental home is considered real property inkind exchange nonrecognition treatment. When there debt relief from both parties, net it. and include with fmv,and boot on getting side. Give NBV 70 ( liab of 60 par of net) getting fmv 65 + cash boot 12 + net liab 8 ( 60-52) = 85 realized gain 15

Question 36

If a person has sell two personal automobile. one get a loss and the other a gain. how is it capture on taxes

Answer 36

Loss 0 can not claim. Gain must be recognized.

Question 37

Are investment in US treasury Bonds a capital asset

Answer 37

Yes. Investment assets that are not inventory are capital assests

Question 38

Would a property held by a individual taxpayer for over a year and sold at a gain be considered long-term capital gain

Answer 38

Yes. because property was held for over a year and sold for more than cost.

Question 39

What amount of a capital loss can an individual taxpayer offset to ordinary income

Answer 39

the limit is $3000 and overage is carryforward indefinitely.

Question 40

If a owner uses land to operate a parking and it has a shed on it for attendants, would any PPE be considered 1231 asset

Answer 40

Both would are PPE and depreciable assets used in a trade or business and used for more than one year.

Question 41

What are not consider capital assets

Answer 41

Property normally in inventory of held for sale to customers Depreciable property and real estate use in a business Accounts and notes receivable arising from sales or services in the taxpayers' business Copyrights, literacy, musical or artistic compositions Treasure stock

Question 42

Define capital assets

Answer 42

personal property held by taxpayer over one year

Question 43

What are 1250 and 1245 assets

Answer 43

1245 are tangible or personal property asset that are depreciated over shorter depreciated lives: MACRS Includes: furnitures, fixtures , carpet, decorative light fixtures, electric cost that serve telephones and data outlets. 1250: real property that depreciable: building, walls, floors, stairs, elevators. roof, HVAC

Question 44

Are personal assets capital assets

Answer 44

Yes.

Question 45

How are 1231 and ordinary gains recognized or sale of 1231 assets

Answer 45

The capture portion of depreciation is a ordinary income | the remainder is a 1231 gain.

Question 46

would government sold bonds by individual tax payer be considered a capital assets

Answer 46

Yes. capital gains are personal property assets held over 1 year

Question 47

For individual: multiple ST G/L and LT G/L how are the reported on tax returns

Answer 47

You add all ST together and LT together and net out. Which ever is dominate will be used to report. If ST sum greater than LT sum, use ST sum. at a 15% rate group.

Question 48

If a taxpayer sold Equipment for $200K that had an adj basis of $180K. Through date of sale, taxpayer had deducted $30 of depr. of that amt, $17K was in excess s/l dep. what amt of gain would be recaptured under 1245 gain

Answer 48

For excess depr, the 1250 rule apply for 1245. Get the recapture: 200-180 20 gain. then the 1245 gain on excess depr is the lesser of excess 30 and 20 recapture 20 gain is 1245 gain

Question 49

Indv taxpayer purch furniture 4 yrs ago for $30000. he sold it for 37000. His accum depr was 20700. what is his l t capital gaint

Answer 49

``` Cost 30000 Acccu 20700 NBV 9300 sold 37000 less nbv 9300 Realize gain 27700 recapture Ordinary income 20700 L t Cap Gain 7000 ```

Question 50

Co sold bldg for $600K. received down payment of $120K and will get four additional payment of $120K. Co. purch bild for $500K and depr exp $80K/ waht is Co. gain in year of sale under the installment method

Answer 50

``` Under the installment calculate amount received in the year * gr % received year 1 $120K * GP % $600 SP Pur 500 - accu de[ 80 = nbv 420 Gross Prof 180 ``` GP %: 180/600 = 30% gain report $36

Question 51

``` Indv can deduct loss of $3K. So if yr 1 loss was -5K, yr 2 1 yr 3 4 How much gain yr3 ```

Answer 51

Yr1 -5 can only use -3K use in y1. can carryforward -2 in year 2 Y2 1 - 2 = -1 y2 Y3 = 4 = gain 4 yr 4.

Question 52

Can you take full loss on 1231 assets for tax purposes

Answer 52

Yes

Question 53

If a taxpayer has a long term lease with a landlord and the landlord wants to sell the building and buyout taxpayer, is the buyout a long term capital gain

Answer 53

Yes. leasehold interest on apartment was more than year.

Question 54

Is Land use in business and held for more than 1 year a 1231 asset. And is inventory for resale a 1231 asset

Answer 54

Land used in business is a 1231 asset. Inventory for resale is not a 1231 assets.

Question 55

Are 1244 stock considered capital gain when sold or ordinary income

Answer 55

1244 are considered ordinary income.

Question 56

Can you deduct loss on the sale of personal residence and municipal bonds

Answer 56

No for loss sale on personal residence | Yes for loss on sale of muni bonds.

Question 57

How are short sales recorded

Answer 57

Short sales result in capital asset sales. The holding period is based on the date the short sale is executed. So if taxpayer purch stock on 12/15 y1 and executed sale on 3/15 yr 2 the would be a ST capital asset sale

Question 58

Taxpayer borrowed $45 to secure property with basis of $20K. Defult on loan. Foreclsorsure preceeding begin. bank sales for $35K as full settlemt of debt. What income should indv recognize on return.

Answer 58

Forclosure of proerty with non recourse, secured loand is treated as a sale of the property. this is not cancellation of debt. $45 outstanding loan - basis 20 = g$25 gain recognized.

Question 59

Can a indv with a non business loss that has a small chance of collections be considered deduction of $3000

Answer 59

No. loss must be 100% worthless.

Question 60

Can related parties use the installment method

Answer 60

Yes.

Question 61

IRS Sections 267 defines related parties transaction as

Answer 61

Brother and Sister, Husband and wife; ancestors & lineal decendents; i.e. grandparents, son, daughter; child from a previous marriage. Not considered related: in-laws, & step-relationship, aunts, uncles, cusins,miece and nephews.

Question 62

from % point of view, shareholders and C corps are considered related when.

Answer 62

shareholder owns more than 50% of the corporation's stock.

Question 63

Angie owns 60%, Mike owns 20%, and Tim owns 20% of Alpha Corp. Alpha corp owns 70% of Delta Corp. Peter owns 30% of Delta. What the ownership in delta and are there any related parties with Angies ownership

Answer 63

Angie has no relationship to the other parties except her interested in Alpha. Angies's % owner in Delat: .60*70%=42%; related party no (not more than 50%); Peter is Angie brother: Angies % in delta 4 2angie*.30 peter = 72%; related party yes; Mike is Angies husband and peter is mike's brother; Angies % .60+.20*70% = 56% Angies ownership; related party; yes Mike and Tim are Angies Stepsblings: Angies% 42% no related party Mike and tim are angies parents and peter is angies nephew. Angies % .60+.20+.20*70% = 70%. related parties yes on the parents

Question 64

A corp sells an automobile to a shareholder for 4500. Corp adjusted basis was 12,000 and the fmv was 5000. what is the loss recognized

Answer 64

Zero. shareholders and considered related parties. Related parties can not tak lossed (WRAP)

Question 65

A father purchase stock from his son for 12000. his son's cost basis was 16000. the father sell the stock for $18000. What is the father recognized gain

Answer 65

the son's loss 12000-16000 - (4000) is not allowed due to related parties. Since father sold stock, his basis in 16000- 18000 rec'd on sale = 2000 recognized gain.

Question 66

Cost recovery deduction on depreciation is calculated through 3 way

Answer 66

3 ways through IBM 1. Internal revenue Code Section 179 2. Bonus Depreciation 3. MACRS

Question 67

A taxpayer may be eligible to take one or more depr cost recovery deductions including:

Answer 67

Section 179 MACRS and Bonus depreciation

Question 68

List order in which cost recovery depreciation is done

Answer 68

PPE- calulated section 179 dedcution. | less calculated basis after 179- bonus depreciation-calculation basis after bonus depreciation-calculated MACRS

Question 69

A company places $1,250,000 of 5 years MACRS property into services in the current year. Scenario 1: Co takes all 179 deduction Scenario 2: Gilmore ops out of 179 deduction 5 years MACRS percentages: 20% yr 1, 32% yr 2, and 19.2% yr 3. 179 limit is $1,000,000 What are calculation for each scenario

Answer 69

``` Yr 1 Senario 1: Company will take the full $1,000,000 179 and 1,250,000-1,000,000= 250,000 MACRS 250,000*20% = 50,000.. YR 1 total : 1,050,000 Y2 : 250,000*32% = $80,000 Yr 3 250,000*19.2% = 48,000 Senario 2 No 179 take = 0 MACRS Yr 1 = 1,250,000*20% 250,000 yr 2 = 1,250,000*32% = 400,000 yr 3 = 1,250,000*19.2% = 240,000 ```

Question 70

When a taxpayer place more than 40%of its property into services in the last quarter of the taxable year the corp mus use what convention

Answer 70

Mid-quarter convention

Question 71

A Co. placed into services a office building costing $264,000 including land at 30,000 on Augst 1 yr 1. what is the deduction for yr 1:

Answer 71

Depreciation for nonrental property is 39years using midmonth conventon: 264,000- 30,000 land = 234,000/39 = 6000 per yr/12 = 500 per month. 500*5.5 (half month aug) = 2250

Question 72

MACRS after 1986 is salvage value ignore

Answer 72

yes.

Question 73

The process for half year conventions : for personal property placed into service or disposed halfway through the year is

Answer 73

one half the years depreciation is allowed in the year in which the property is placed into services, regardless of when property is placed into services during the year. same holds true with disposal.

Question 74

what are five year MACRS property 200% ddb

Answer 74

automobiles, , light trucks, computers, and copiers

Question 75

what are three year MACRS property 200% ddb

Answer 75

special tools for manufacturing plastics, fabrics, motor vehicles

Question 76

what are seven year MACRS property 200% ddb

Answer 76

office furnitures, fixtures, equipment

Question 77

what are ten year MACRS property 200% ddb

Answer 77

Vessel and water transportaion

Question 78

what are 15 year MACRS property 200% ddb

Answer 78

municipal sewage treatment plants

Question 79

what are 25 year MACRS property 200% ddb

Answer 79

municipal sewage treatment plants 25 yrs and older

Question 80

What are some of the intangible assets that can be amortized for tax deductions

Answer 80

customer list, trade names, patent, good will, covenants at 15years no convention

Question 81

Is land depreciable

Answer 81

No

Question 82

What is real property

Answer 82

Real property are building and land, homes and all items affixed to land

Question 83

What is personal property

Answer 83

Machines, furniture, clothes , automobiles anything not real property

Question 84

Half year convention on

Answer 84

personal property

Question 85

Mid month convention

Answer 85

real property. Half month taken when real property disposed

Question 86

what are the s/l depr for residental rental real property and nonresidential real property

Answer 86

residental rental real property 27.5 years | and nonresidential real property 39 years

Question 87

In year 4 Mom sold 50 shares of stock to son for 42000. she bought at 50000 8years ago. Son sold in year5 for 60000. how much gain will son recognize.

Answer 87

for related stock purchase and sale, son would use anything over basis at son fmzv basis less sales+ 50-60 = 10 recognized. under mom basis use mom basis less sales 42000-40000 = 2000 loss not deductible. Anything in between no g/l.

Question 88

what is the beneficiary basis of property at decendents death

Answer 88

FMV

Question 89

When donor gift property to donee. what is donee new basis

Answer 89

It would be donors basis. However, if fmv lower than donor basis than use fmv

Question 90

real property uses what .convention

Answer 90

Mid month with mid month being the first month to sum up. for example purchase bugilding aug 23. what is depre aug 1/2 (1), sept (2), oct (3), nov (4), dec 5 . = 5.5 months

Question 91

becareful with MACRS depreciation with y3 placed in service questions

Answer 91

for example co. purch a machine in y3. what is the machine macrs for yr3. Use the period 1 macrs b/caus the machine purch yr 3 for periord 1 macrs

Question 92

From a tax perspective, which is the difference btwn realize and recognize

Answer 92

realize shows non tax; recognize tax

Question 93

if the Alternative valuation date (AVD)is used and beneficiary sold stock after the date, what is the basis to the beneficiary

Answer 93

If beneficiary sold stock after the AVD then the basis is the FMV on the date of AVD minus FMV at date of distribution. If sold before AVD, the beneficiary basis is the basis is the FMV on date of sale minus FMV of decedent at of distribution..

Question 94

Subjects that are true about decedents, fmv, basis, and gifts

Answer 94

If asset is acquire by gift and the fmv on date is lower than donors basis,the recipient basis can't be determine until asset is sold Basis of property acquired by gift is a carryover of of basis from donor

Question 95

Is the basis of property acquired by decendent always the FMV of date of death of decendent.

Answer 95

No. AVD can change the date.

Question 96

If Joe lived in his primary residence in for four years and sold in yr 3, does he get the sales of primary residence exclusion

Answer 96

Yes. he owned 2yrs out of a 5 yr period.

Question 97

If a co. loss a building with a adj. basis of $890K to a fire. The insurance proceeds were $950K, The new building purchase was $900K. What is the recognized gain an new basis

Answer 97

. Realized gain is $60K = 950 proceeds - 890 adj basis Recognize $50K (boot) = $950K proceeds- $900 new building; deferred $10K from realized New basis $890K = $900 fmv getting - deferred gain $10K.

Question 98

What is the recognized gain for a receiver when both parties asssum liab as boot in like kind transctions

Answer 98

you net the assumed liab.

Question 99

If installment sales were used and Yr2 sale 40- Yr 2COS = 10 gp. what is deferred gp

Answer 99

Deferred GP y2 = 10 gp/40 s = 25% gp% 10gp*25% = 2.5 deferred gp. If y3 was S 50 - COS 25= 25 gp. 25/50 = 50% gp %. 25*50% = 12.5. Solve how much def gp yr3 = 12.5-2.5 yr 2 = 10 def gp yr 3.

Question 100

On 4/4/y4 If Rick purchase 100 shares @ $86 per shares = $8600 basis. On 2/8/y5 sold 50 shares @ $60 = $3000 and on 3/1/yr5 repurch 50shares at $64 = $3200. What is realize loss on y5 and recognized. what is the basis. What is the amount of the 50 sharse repurch new basis

Answer 100

Amount loss realized= Purch on 2/8/yr 5 from 4/4/yr can be used to calc loss. 50shars are half of total purch. 86*50= 4300 60*50=3000 loss = 1300 Amount loss recognized = zero due to wash sale buy bak on 3/1/y5 50 shares basis : the $1300 realized is not deferred due wash sales. Basis of 50shs 3200+def loss 1300-def gain 0 = 4500.

Question 101

if co. purch equipment in early part of yr for 20 and purch other in late yr 30. waht is convention

Answer 101

It is mid qt= if only tw pruch and last beats early by more 40% than mid qtr. 30/ (20/30) = 60%

Question 102

MACRs convention is mid year built in table for depreciation

Answer 102

Yes already build in for Depr exp

Question 103

MACRs convention is mid year built in table for sale

Answer 103

No. must take orginal cost * macrs % and year /half year

Question 104

Is Real Property eligible for 179 deduction

Answer 104

Yes.

Question 105

Is 179 deduction allowed for losses

Answer 105

No.

Question 106

Under 1231; 1245 Asset used in business, sales price greater than adj basis but not greater than original cost would all gain be 1245 recaptured.

Answer 106

Yes because all gain is accum dep = all gain is 1245

Question 107

On a 1250 (1231 real property used in business) how much of excess of straight line depreciation is considered ordinary

Answer 107

Build purch at 124K sold at 200 and had 14K accum dep of which 4 was excessive. 124-14 = 110 adj basis 200 sold - 110 adj basis = 90 gain on sale. Any accum of excessive is considered 1250 ordinary income; so the 4 is considered 1250 ordinary. Of the 14 depr, 10 would be considered unrecaptured.

Question 108

How do you determain recognized gain on 1250

Answer 108

the lessor of S-adj basis= gain to accum depr.

Question 109

How are multiple 1231 g/l posted

Answer 109

cost - accum depr = nbv. Step 2 SP - NBV = g/l Gain: Gain - Recapture depr (ordinary) = 1231 gain. For loss = ordinary DO NOT NET TO 1231 gain.

Question 110

What is 1245 ordinary gains

Answer 110

It is the less of accum depr and recognized gains

Question 111

John purch home on 10/15/y2,. One 6/10/yr he married Susan and she moved into the house. From Oct 15/y5 to Oct 15 yr 6 that lived else where and rented the home. they returned Oct 15, yr 6 and sold home Oct 15, y 7 for $855K what is the gain

Answer 111

Both meet time require (not necessary for spouse to be on deed) only one meet use require but only one meet the ownership requirement. There a gap in living so one year gap non qualified for deducted from $500K exclusion. 855-240 = 610 realized gain. 610*1y/5y =122 recognized gain.

Question 112

What is the calc for 1231 g/l and 1245 recapture. | Cost Accu dep Adj basis = g/l 1245 recap 1231 g/l

Answer 112

Cost- Accu dep= Adj basis - SP = g/l 1245 recap 1231 ordinary 5000-3000= 2000- 2300 = 300 300 0 1200 - 500= 700 - 2000 = 1300 500 800 3800- 1800= 2000- 1500 = (500) 0 (500) Total 800 300

Question 113

What is tax treatment of net losses in excess of the at-risk amount for an activity

Answer 113

Any losses in excesses of the at-risk rare suspended (deferred) and carryforward indefinetly against future net income.