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ACCT 323HOMEWORK #5FEBRUARY 20161. Umair sold some equipment he used in his business on August 29, 2014, thatwas originally purchased for $70,000 on November 21, 2013. The equipmentwas depreciated using the 7-year MACRS method for a total of $18,574.Assume there is no additional netting of gains and losses for this taxpayer.a. Assume Umair sold the equipment for $50,000:(1) What is the amount of realized gain or loss on the sale of theequipment?(2) Is the nature of the gain or loss considered ordinary or long-term?b. Assume Umair sold the equipment for $60,000:(1) What is the amount of realized gain or loss realized on the sale of theequipment?(2) Is the nature of the gain or loss considered ordinary or long-term?2. Alice owns undeveloped land with an adjusted basis of $140,000. She sells theproperty to George for $185,000.a. What is Alice’s realized and recognized gain?b. What IRC section does the gain on the property apply?c. If the land is used in a trade or business, what IRC section does the gain onthe property apply?3. Using the following independent situations, answer the following questions:Situation 1Clara received from her Aunt Sona property with an FMV at the date of the giftof $40,000. Aunt Sona purchased the property five years ago for $35,000.Clara sold the property for $43,000. Assume Aunt Sona does not have MAGIof over $200,000.a . Whaat .i s the basis to Clara?b . Whabt .i s Clara’s gain on the sale?c. If Clacr.a is in the 33% tax bracket, what is the tax on the gain(assuming she has no other gains/losses to be netted)?d . If Cladr.a is in the 15% tax bracket, what is the tax on the gain(assuming she has no other gains/losses to be netted)?Situation 2Clara received from her Aunt Sona property with a FMV at the date of the giftof $30,000. Aunt Sona purchased the property five years ago for $35,000.a . If Claar.a sold the property for $43,000, what is her gain or loss onthe sale?b . If Clabr.a sold the property for $33,000, what is her gain or loss onthe sale?c. If Clacr.a sold the property for $28,000, what is her gain or loss onthe sale?4. Ramon received a gift of stock from his uncle. The basis of the stock to hisuncle was $20,000, and it had a FMV of $13,000 at the date of the gift. Thedonor held the property for more than one year. Complete the following chartunder the independent situations shown:Situation 1 Situation 2 Situation 3Donor’s basis $20,000 $20,000 $20,000FMV at gift date 13,000 13,000 13,000Ramon’s selling price 25,000 10,000 15,000Basis to RamonTaxable gain (if any)Deductible loss (if any)
