Federal Taxation
Federal Taxation
Week 7 homework
Property Transactions
Question 10-1
Distinguish between realized gains and losses and recognized gains and losses.
You will always have a loss or a gain due to an exchange transaction. Once the transaction is completed the corresponding amount will be recorded on your income statement. Recognition exists only in the context of tax laws, in some cases the exchange transaction will be excluded under IRC Section 1031.
Problem 10-47
On April 18, 2010, Jane Juniper purchased 30 shares of Bryan Corp. stock for $210, and on September 29, 2010, she purchased 90 additional shares for $900. On November 28, 2010, she sold 48 shares, which could not be specifically identified, for $576 and on December 8, 2010, she sold another 25 shares for $188. What is her recognized gain or loss?
$210/30=$7 per share - April 18, 2010
$900/90=$10 per share - September 29, 2010
I will use FIFO to calculate the recognized gain or loss:
November 28, 2010 – Sold 48 shares for $576, the cost basis was $390 (30*$7 plus 18*$10) therefore the total gain was $186.00
December 8, 2010 - Sold 25for $188, cost basis was $250 (25*$10) therefore the total loss was $62.
Jane Juniper had an overall gain for the year of 2010 of $124.00
Problem 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 adjusted bases 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 Elizabeth
Property exchange amount $15,000 $10,500
Fair market value 0 $4,500
Boot received $12,000 $9,000
Adjusted Basis $3,000 $6,000
Realized Gain 0 $4,500 (Based on FMV)
Basis of new property $12,000 $13,500
Problem 12-34
Jim Junction purchased a truck for business on November 17,
Week 7 homework
Property Transactions
Question 10-1
Distinguish between realized gains and losses and recognized gains and losses.
You will always have a loss or a gain due to an exchange transaction. Once the transaction is completed the corresponding amount will be recorded on your income statement. Recognition exists only in the context of tax laws, in some cases the exchange transaction will be excluded under IRC Section 1031.
Problem 10-47
On April 18, 2010, Jane Juniper purchased 30 shares of Bryan Corp. stock for $210, and on September 29, 2010, she purchased 90 additional shares for $900. On November 28, 2010, she sold 48 shares, which could not be specifically identified, for $576 and on December 8, 2010, she sold another 25 shares for $188. What is her recognized gain or loss?
$210/30=$7 per share - April 18, 2010
$900/90=$10 per share - September 29, 2010
I will use FIFO to calculate the recognized gain or loss:
November 28, 2010 – Sold 48 shares for $576, the cost basis was $390 (30*$7 plus 18*$10) therefore the total gain was $186.00
December 8, 2010 - Sold 25for $188, cost basis was $250 (25*$10) therefore the total loss was $62.
Jane Juniper had an overall gain for the year of 2010 of $124.00
Problem 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 adjusted bases 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 Elizabeth
Property exchange amount $15,000 $10,500
Fair market value 0 $4,500
Boot received $12,000 $9,000
Adjusted Basis $3,000 $6,000
Realized Gain 0 $4,500 (Based on FMV)
Basis of new property $12,000 $13,500
Problem 12-34
Jim Junction purchased a truck for business on November 17,