Question

In: Accounting

43. Sidney Southern owned a restaurant which was condemned on November 20, 2018. On January 15,...

43. Sidney Southern owned a restaurant which was condemned on November 20, 2018. On January 15, 2019, he received a condemnation award of $280,000. The adjusted basis of his restaurant was $120,000. He purchased another restaurant on March 17, 2019, for $300,000.

a. What is Sidney's lowest recognized gain or loss? What is his basis in the restaurant?

b. What would be the answer to (a) if the replacement cost was $240,000?

c. What is the last possible date on which Sidney could have purchased qualified replacement property?

d. What is the answer to (c) if the restaurant had been destroyed by fire instead of being condemned?

Solutions

Expert Solution

***Feel free to communicate through the comment window if you have any further queries regarding the solution.


ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Vince’s Spaghetti is a family-owned restaurant in Southern California. The corporate office provides 2 kinds of...
Vince’s Spaghetti is a family-owned restaurant in Southern California. The corporate office provides 2 kinds of services (maintenance and personnel) to Vince’s 3 locations (Ontario, Redlands, and Temecula). In a recent accounting period, the direct cost for maintenance was $25,000 and for personnel was $15,000. Maintenance costs are allocated on the basis of square feet, and personnel costs are allocated based on the basis of number of employees.                                                                          Number of                                              Square Feet         Employees Support Departments: Maintenance                         1,000                    15...
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $100,000. Southern...
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $100,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 45% of cost in 2018, 30% in 2019, and 25% in 2020. Pretax accounting income for 2018 was $580,000, which includes interest revenue of $80,000 from municipal bonds. The enacted tax rate is 40%. Assuming no differences between accounting income and taxable...
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000. Southern...
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $260,000, which includes interest revenue of $30,000 from municipal bonds. The enacted tax rate is 30%. Assuming no differences between accounting income and taxable...
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000. Southern...
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $280,000, which includes interest revenue of $40,000 from municipal bonds. The enacted tax rate is 30%. Assuming no differences between accounting income and taxable...
On January 1, 2018, Rare Bird Ltd. purchased 15% bonds dated January 1, 2018, with a...
On January 1, 2018, Rare Bird Ltd. purchased 15% bonds dated January 1, 2018, with a face amount of $28 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the price...
Molly’s Home Cooking, a regional restaurant with locations in three small Southern towns, one of which...
Molly’s Home Cooking, a regional restaurant with locations in three small Southern towns, one of which is a college town, specializes in comfort foods and regional specialties. Two of the restaurants have been open for over five years. The Molly’s located in the college town opened in May 2018. The restaurants are either freestanding near other businesses or in a strip shopping/eating area. With a menu consisting of all fresh, cooked-to-order foods, Molly’s features different items daily and serves traditional...
Canada Snowcones Ltd. (CSL) owned and operated 20 retail frozen yogurt stores spread throughout Southern Ontario,...
Canada Snowcones Ltd. (CSL) owned and operated 20 retail frozen yogurt stores spread throughout Southern Ontario, from Toronto to Windsor. CSL's stores sold only high quality, premium frozen yogurt. They offered an assortment of 35 different frozen yogurt flavours. A significant amount of the CSL flavours were special, such as "Peanut Butter Bacon", "Charcoal-Sushi", and "Tropical Cheese Sensations". However, CSL also sold a few of the classic frozen yogurt flavours, such as vanilla, milk chocolate, mint, and other singular fruit...
Information pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019...
Information pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019 (Budgeted) Cash sales $ 80,000 $ 100,000 $ 60,000 Credit sales 240,000 360,000 180,000 Total sales $ 320,000 $ 460,000 $ 240,000 Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next...
nformation pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019...
nformation pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019 (Budgeted) Cash sales $ 180,000 $ 160,000 $ 100,000 Credit sales 360,000 500,000 260,000 Total sales $ 540,000 $ 660,000 $ 360,000 Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next...
It’s November 20, 2018. You are the controller of Lashkey Co., a $400 million (sales) manufacturing...
It’s November 20, 2018. You are the controller of Lashkey Co., a $400 million (sales) manufacturing company. As you prepare forecasts for the year ending December 31, 2018, you discover that cash flow from operating activities is substantially lower than was expected. You ask your staff to suggest steps that could be taken before the end of the year to boost cash flow from operating activities. Following are your staff’s recommendations. For each one, indicate if it would (answer “yes”)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT