Accounts: Realized Gains and Losses and Recognized Gains and Losses

Topics: Depreciation, Real estate, Tax Pages: 2 (622 words) Published: February 19, 2013

10-1: Distinguish between realized gains and losses and recognized gains and losses Realized gain or loss is the difference between the amount realized from the sale or other disposition of property and the adjusted basis at the time of sale or disposition. If the amount realized exceeds the adjusted basis, there is a realized gain. On the other hand, if the adjusted basis exceeds the amount realized, there is a realized loss If a realized gain or loss is recognized, the gain is includible and the loss is deductible in determining taxable income. Thus, "recognition" means that the result of a particular transaction is considered to be taxable income or a deductible loss. Generally, recognition occurs at the time of sale or exchange. 2013 CCH Federal Taxation, Comprehensive Topics by Smith, Harmelink, and Hasselback

10-47: On April 18, 2012, Jane Juniper purchased 30 shares of Bryan Corp. stock for $210, and on September 29, 2012, she purchased 90 additional shares for $900. On November 28, 2012, she sold 48 shares, which could not be specifically identified, for $576 and on December 8, 2012, she sold another 25 shares for $188. What is her recognized gain or loss? Purchase of shares:

April 201: Price of a share=$210/30=$7
Sept 2012: Price of a share=$900/90=$10
Sale of shares:
48 shares for $576
3 x 7=210 and 18 x 10=180. Thus 210 x 180=$390
25 shares for $188
25 x 10=250 .Thus $250-$188=$62.00
Thus, her recognized gain is 186-62=$124

11-40: Debbie Davis and Elizabeth Engels exchanged like-kind property. Debbie had an adjusted basis of $12,000 in her property (fair market value is $15,000). Elizabeth's property had an adjusted basis of $9,000 and a fair market value of $10,500, and Elizabeth gave Debbie $4,500 in cash. Determine Debbie's and Elizabeth's realized gain or loss, recognized gain or loss, and the basis in their new property. Debbie’s Realized Gain=10,500 + 4,500 – 12,000 = 3,000

Debbie’s basis...
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