[The following information applies to the questions displayed below.] Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley has owned each of the assets since he began the business. In the current year, Buckley sold the following business assets: Accumulated Depreciation Gain/Loss Asset Computers Original Cost $ 6,000 $ 2,000 $ (3,000) Machinery 10,000 4,000 (2,000) Furniture 12,000 7,000 Building 10,000 (1,000) 20,000 100,000 Assuming Buckley's marginal ordinary income tax rate is 32 percent, answer the questions for t following alternative scenarios:
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- In year 0, Longworth Partnership purchased a machine for $64,750 to use in its business. In year 3, Longworth sold the machine for $43,200. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $23,900. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What is the amount and character of the gain or loss Longworth will recognize on the sale? In year 0, Longworth Partnership purchased a machine for $64,750 to use in its business. In year 3, Longworth sold the machine for $43,200. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $23,900. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What is the amount and character of the gain or loss Longworth will recognize on the sale? In year 0, Longworth Partnership purchased a machine for $64,750 to use in its business. In…In year 0, Longworth Partnership purchased a machine for $44,500 to use in its business. In year 3, Longworth sold the machine for $38,400. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $31,100. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What are the amount and character of the gain or loss Longworth will recognize on the sale? Description Amount Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) §1231 gain/(loss) b. What are the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are increased to $68,000? Description Amount Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) §1231 gain/(loss) c. What are the amount and character of the gain or loss Longworth will recognize on the sale…In year 0, Longworth Partnership purchased a machine for $55,500 to use in its business. In year 3, Longworth sold the machine for $38,600. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $28,200. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What is the amount and character of the gain or loss Longworth will recognize on the sale? Description Amount Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) §1231 gain/(loss)
- In year 0, Longworth Partnership purchased a machine for $54,500 to use in its business. In year 3, Longworth sold the machine for $36,000. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $26,700. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What is the amount and character of the gain or loss Longworth will recognize on the sale? b. What is the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are increased to $65,500?In year 0, Longworth Partnership purchased a machine for $55,500 to use in its business. In year 3, Longworth sold the machine for $38,600. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $28,200. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) b. What is the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are increased to $66,750? Description Amount Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) §1231 gain/(loss)n year 0, Canon purchased a machine to use in its business for $56,000. In year 3, Canon sold the machine for $42,000. Between the date of the purchase and the date of the sale, Canon depreciated the machine by $32,000. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) c. What are the amount and character of the gain or loss Canon will recognize on the sale, assuming that it is a corporation and the sale proceeds were increased to $60,000? Total Gain/Loss Recognized Character of Recognized Gain/Loss Ordinary Gain/Loss 1231 gain/loss
- in year 0, Longworth Partnership purchased a machine for $40,000 to use in its business. In year 3, Longworth sold the machine for $35,000. Between the date of purchase and the date of the sale, Longworth depreciated the machine by $22,000. What are the amount and character of the gain or loss Longworth will recognize on the sale? What are the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are increased to $45,000? What are the amount and character of the gain or loss Longworth will recognize on the sale if the sale proceeds are decreased to $15,000?Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $102,000, and it has claimed $ 33,800 of depreciation expense against the building. Required Assuming that Hauswirth receives $80, 500 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. Assuming that Hauswirth exchanges the warehouse in a like kind exchange for some land with a fair market value of $80, 500, compute Hauswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. Assuming that Hauswirth receives $27,500 in cash in year 0 and a S 88,500 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain or loss in year 0 and in year 1.Sumner sold equipment that it uses in its business for $31,400. Summer bought the equipment a few years ago for $79,300 and has claimed $39,650 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?
- This year, Neil Incorporated exchanged a business asset for an investment asset. Both assets had a $932,000 appraised FMV. Neil’s book basis in the business asset was $604,600, and its tax basis was $573,000. Three years after the exchange, Neil sold the investment asset for $1,000,000 cash. Required: Compute Neil’s book gain and tax gain on sale assuming Neil acquired the investment asset in a taxable exchange. Compute Neil’s book gain and tax gain on sale assuming Neil acquired the investment asset in a nontaxable exchange.Eleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Required:a. Compute Lynn’s gain recognized on the sale of the warehouse.b. What is the character of this gain?c. How would your answers change if Lynn was a noncorporate business?his year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Accumulated Depreciation* Sale Price Marketable securities $ 182,000 $ 0 $ 64,500 Production equipment 96,800 77,440 50,750 Business realty: Land 214,500 0 234,250 Building 248,000 74,400 243,000 *Through date of sale. Required: Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses.