Complete the following. In these problems, apply your knowledge of the rules and laws associated with the sale of ordinary assets, capital assets, and business assets.
Problem 41, on page 7-47.
Problem 43, on page 7-48.
Problems Attached 41. Umair sold some equipment he used in his business on August 29, 2018, that was originally
purchased for $65,000 on November 21, 2017. The equipment was depreciated using the 7-year MACRS
method for a total of $17,249. Assume there is no additional netting of gains and losses for this
taxpayer.
a. Assume Umair sold the equipment for $45,000:
(1) What is the amount of realized gain or loss on the sale of the equipment?
(2) Is the nature of the gain or loss considered ordinary or long-term?
b. Assume Umair sold the equipment for $49,000:
(1) What is the amount of realized gain or loss on the sale of the equipment?
(2) Is the nature of the gain or loss considered ordinary or long-term?
43. Haneen has taxable income of $115,000 without consideration of capital gain or loss transactions.
She has a short-term capital gain of $18,000, a long-term capital loss of $10,000, and a short-term
capital gain of $4,000. Assume no gains or losses are from collectibles or unrecaptured § 1250 property
and Haneen is in the 24% tax bracket.
a.
b.
c.
d.
What is the total short-term gain or loss?
What is the total long-term gain or loss?
What is the carryover amount?
Is the gain or loss after netting taxed at the ordinary or capital rate?
46. Jake purchased a $235,000 crane for his construction business. He sold the crane for $175,000 after
taking $115,000 of depreciation. Assume Jake is in the 35% tax rate bracket.
a. On what form would the gain or loss originally be reported?
b. What is the amount of gain or loss on the sale?
c. What amount of the gain or loss is subject to ordinary tax rates?
51. In 2018 Rosalva sold stock considered short-term for a gain of $1,060 and stock considered longterm for a loss of $2,376. She also had a $3,000 short-term loss carryover from 2017 and a $1,420 longterm loss carryover from 2016.
a.
b.
c.
d.
What amount will be shown as a short-term gain (loss) for 2018?
What amount will be shown as a long-term gain (loss) for 2018?
How much of the loss is deductible in 2018?
What is the amount of long-term carryover to 2019?
56. Ramon received a gift of stock from his uncle. The basis of the stock to his uncle was $25,000, and it
had a FMV of $18,000 at the date of the gift. The donor held the property for more than one year.
Complete the following chart under the independent situations shown:
Situation 1
Situation 2
Situation 3
$25,000
$25,000
$25,000
FMV at gift date
18,000
18,000
18,000
Ramon’s selling price
30,000
15,000
20,000
Basis to Ramon
——–—
——–—
——–—
Taxable gain (if any)
——–—
——–—
——–—
Deductible loss (if any)
——–—
——–—
——–—
Donor’s basis
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