Question

In: Finance

Sales price: $500,000 Property taxes attributable to period before purchase: 8,000 Property taxes attributable to period...

Sales price: $500,000

Property taxes attributable to period before purchase: 8,000

Property taxes attributable to period between purchase and year-end: 2,500

Title insurance: 500

Total amount spent: $511,000

What is the total cost of the property for tax purposes?

Solutions

Expert Solution

total cost of the property for tax purposes = Sales price + Property taxes attributable to period before purchase + Title insurance

     500000 +8000 + 500

        $ 508500

** Property taxes attributable to period between purchase and year-end: =It will be claimed as expense and not added to cost of property since the same is paid after the asset is purchased and ready for use.


Related Solutions

Blackwater Company has a foreign branch that earns income before income taxes of $500,000. Income taxes...
Blackwater Company has a foreign branch that earns income before income taxes of $500,000. Income taxes paid to the foreign government are $150,000 or 30%. Sales and other taxes paid to the foreign government are $100,000. Blackwater Company must include the $500,000 of foreign branch income in determining its home country taxable income. In determining its taxable income, Blackwater can choose between taking a deduction for all foreign taxes paid or a credit only for foreign income taxes paid. The...
Property Assumptions: Purchase Price:                                    &n
Property Assumptions: Purchase Price:                                                  $4,000000 Year 1 PGI:                                                      $600,000 PGI Growth Rate (Annual):                                3% Annual Vacancy and Collection Loss (VCL):      5% Operating Expenses (OER):                               35% Terminal Capitalization Rate for Sales Price        .09                        Capitalize NOI (Year 4) Anticipated Holding Period:                               3 Years Maximum LTV:                                                70% Interest Rate:                                                     5% Amortization Period:                                           30 Years Payments Per Year:                                                  12 Discount (Hurdle) Rate (Unleveraged & levered):       15% What is the Unleveraged IRR and NPV? What is the leveraged IRR and NPV? What is...
Property Assumptions Purchase Price:                                    &nb
Property Assumptions Purchase Price:                                                                        $12,500,000 Year 1 Potential Rental Income (PRI):                                    $1,650,000 PGI annual growth rate:                                                          3% Annual Vacancy and Credit Loss (VCL):                               5%             Over next 6yrs. Year 1 operating expenses (OER): (Oper. Expense Ratio)     35% OPEX annual growth rate (after year 1):                                 2% Sales Price :     Terminal Cap Rate                                           .09 Capitalize 6th yr. NOI Sales Costs: Commissions                                                      3% of Sales Price Anticipated holding period                                                      5 years Maximum loan-to-value (LTV) ratio:                                      75% Interest Rate:                                                                           5.25% Amortization Period:                                                               20 years...
On March 15, Calloway, Inc., paid property taxes of $500,000 for the calendar year. 17. Required...
On March 15, Calloway, Inc., paid property taxes of $500,000 for the calendar year. 17. Required information How much of this expense should Calloway’s income statement reflect for the quarter ending March 31? $0. $125,000. $41,667. $500,000. 18. Required information The journal entry at March 15 to record the payment of property taxes would include which of the following? A debit to Property Tax Expense of $500,000. A credit to Cash of $125,000. A credit to Prepaid Property Taxes of...
Ricalta Inc. earns a total of $500,000 before interest and taxes. Its total debt is $1,110,000...
Ricalta Inc. earns a total of $500,000 before interest and taxes. Its total debt is $1,110,000 (costing 5%). It has 150,000 shares of common stock at $5 per share. The firm is considering reducing its debt by $450,000 by issuing an additional 90,000 shares of common stock. The firm is in the 35 percent tax bracket. Its earnings before interest and taxes will remain the same as the new capital structure will not impact the firm’s operations. Which of the...
Michaels Corporation expects earnings before interest and taxes to be $ 53,000 for this period. Assuming...
Michaels Corporation expects earnings before interest and taxes to be $ 53,000 for this period. Assuming an ordinary tax rate of 40 %​, compute the​ firm's earnings after taxes and earnings available for common stockholders​ (earnings after taxes and preferred stock​ dividends, if​ any) under the following​ conditions: a. The firm pays $ 11,900 in interest. b. The firm pays $ 11,900 in preferred stock dividends.
Three taxes: Sales Tax, Property Tax, and Income Tax. Name three types of taxes and analyze...
Three taxes: Sales Tax, Property Tax, and Income Tax. Name three types of taxes and analyze the deadweight loss of each. Which of these taxes do you believe create the highest deadweight loss? Why? Why is deadweight loss disagreed on by experts? Explain.
You are considering the purchase of a distressed property. The price is $115,000, and you believe...
You are considering the purchase of a distressed property. The price is $115,000, and you believe that you can complete the required repairs and renovation and re-sell the property in twelve months. You can finance the purchase with a $97,750, 6.5% interest-only loan. The costs associated with acquiring the property include legal fees of $950, an inspection fee of $600, $5,500 to pay off an existing lien, and loan closing costs of $3,500. A thorough and careful assessment of the...
Sales Revenue is $1,000,000, Earnings Before Interest and Taxes is $400,000, and Earnings After Interest and...
Sales Revenue is $1,000,000, Earnings Before Interest and Taxes is $400,000, and Earnings After Interest and Taxes is $300,000. Accounts Receivable is $50,000. The Average Collection Period is (assume a 365 day year):
3. A personal property asset has a purchase price of $50,000 and an installation cost of...
3. A personal property asset has a purchase price of $50,000 and an installation cost of $10,000. Book depreciation method is the sum-of-years-digits method with a 6-year depreciable life and a $3,000 salvage value. Which one of the following values is correct (rounded to the nearest integer)? (a) D3 = $11,429 (b) B4 = $8,571 (c) B5 = $5,429 (d) D6 = $2,714 4. On January 1st 2009, a company purchased a machine for $14,000, which is a 7-year MACRS...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT