Property transactions: Nontaxable exchanges - Like kind exchange

Explain how realized and recognized gain or loss for a personal-used asset is assessed. Mike owns a car that he uses exclusively for personal purpose. Its original cost was $26,000, and the fair market value is $12,000. He exchanges the car and $18,000 cash for a new car. a. Calculate his realized and recognized gain or loss. b. Calculate his basis for the new car. c. Determine when his holding period for the new car begins.

Property transaction: Nontaxable exchanges under Section 121, Sale of personal residences

Meg and Walt are going to be married in three months. Meg has owned and lived in her home for 42 years, and Walt has owned and occupied his home for 35 years. They both have listed their homes for sale. They anticipate the sales results will be as follows: Meg's *Selling price $450K *Selling expenses $40K *Adjusted basis $75K Walt's *Selling price $190K *Selling expenses $19K *Adjusted basis $60K They intend to purchase a residence in an extended care facility for $400K. They have come to you for advice regarding the following: a. What is their recognized gain if they marry before they sell their residences? b. What is their recognized gain if they marry after they sell ... click for more

Property transaction: Section 1231 and recapture provisions

Yoshida owns two parcels of business land (Section 1231 assets). One parcel can be sold at a loss of $30K, and the other parcel can be sold at a gain of $40K. Yoshida has no norecaptured Section 1231 losses from prior years. The parcels could be sold at any time because potential purchasers are abundant. Yoshida has a $25K short-term capital loss carryover from a prior tax year and no capital assets that could be sold to generate long-term capital gains. Both the land parcels have been held more than one year. What would you advice for Yoshida? (Assume tax rates are constant and ignore the present value of future cash flow.)

AMT Adjustments and Computation of AMT Tax

Given summary information about Allen’s 2006 income tax return, what is the amount of AMT adjustments related to itemized deductions? What is the AMT liability for 2006? See attached file for full problem description.

Prepaid Expenses and tax deductions for a cash basis taxpayer

Pamello, Inc, an engineering consulting firm, uses the cash method of accounting. Compute the amount of Pamello’s current year deductions for the five transactions. See attached file for full problem description.