Tax problems for depreciation, exchanges and gain calculations for Section 1245 and Section 1250 property

Bonnie purchased a new business asset (5-year property) on 03/10/06, at a cost of $20,000. She also purchased a new business asset (7-year property) on 11/20/06 at a cost of $13,000. Bonnie did not elect straight-line recovery. Determine the cost recovery deduction for 2006 these assets? David owns a warehouse that is used in business while Gloria owns land. David exchanges the warehouse for the land which will be held for investment. The FMV of the warehouse is $240,000 (basis $100,000) and the warehouse is subject to a mortgage of $50,000 which is assumed by Gloria. David receives $40,000 cash and the land which has a FMV of $150,000 ( basis of $130,000 to Gloria). David realizes a gain... click for more

Taxable Income problem

Janet, (single) has the following items for 2006: salary $140000 Home mortgage interest $10,000 A hurricane completely destroyed her duplex during the current year. She lived in half of the duplex & rented the other half. She paid $400,000 for the duplex & has taken $80,000 of cost recovery on the rental portion. It was worth $420000 at the time of destruction. Janet's insurance policy paid her 90% of the FMV. Household items destroyed in the hurricane had a basis of $15,000 & FMV of $8500. There was no insurance recovery on household items. Janet purchased a painting 3 years ago for $4000. At the time of the hurricane, the painting was worth $10000. She purchased the painting a... click for more

Charitable contribution problem

Kelly has AGI of $100,000 in 2006. She contributes stock in Tulip Corp. (a publicly traded corp.) to a State University (a qualified charitable org.) The stock is worth $59000 & she acquired it as an investment 2 years ago at a cost of $44,000. 1. What is the total amount that kelly can deduct as a charitable contribution, assuming she carries over any disallowed contribution from 2006 to future years? 2. What is the maximum amount that kelly can deduct as a charitable contribution in 2006? 3. What factors should kelly consider in deciding how to treat the contribution for federal income tax purposes? 4. Assume Kelly dies in December 2006. What advice would you give the executor ... click for more

Itemized deductions - limitations on certain types of deductions

For 2006, Jon & Betty Smith file a joint return with AGI of $240,000. Their itemized deductions are the following: Medical expenses before AGI floor $23000 Casualty loss (not covered by insurance) before statutory floors $26,000 Interest on home mortgage $10,000 Interest on credit cards $800 Property taxes on home $13,000 Charitable contributions $17,000 State income tax $15,000 Tax return filing fees $1200 After all necessary adjustments are made, what is the amount of itemized deductions the Hansens may claim?

Itemized Deductions Limitations

Bob, who is single had AGI of $400,000 in 2006. He incurred the following expenses & losses during the year. Medical expenses before 7.5% of AGI limitation $39,500 State & local income taxes $5,200 Real Estate taxes $4,400 Home mortgage interest $5,400 Charitable contributions $4,800 Casualty loss before 10% limitation (after $100 floor) $47,000 Unreimbursed employee expense subject to 2%-of-AGI limit $8,900 Gambling losses (Charles had $7,400 of gambling income) $9800 Compute Bob's itemized deductions before & after the over... click for more