Question
In: Accounting
Ava owned a building held for investment worth $800,000 in which her basis was $545,000. Ava...
Ava owned a building held for investment worth $800,000 in which her basis was $545,000. Ava owed a $320,000 mortgage on the building. She exchanged the building for a warehouse owned by Caddy Corp. which she intends to use in her business. Caddy assumed Ava’s mortgage.
Caddy used the warehouse in its business and it intends to use Ava’s land in its business. Caddy’s basis in the warehouse was $482,000. Caddy owed a $365,000 mortgage on the building that Ava assumed.
Caddy and Ava are completely unrelated.
Required: Input a $ answer for each requirement, but SHOW COMPUTATIONS for partial points.
1) What is the fair value of Caddy’s warehouse that was transferred to Ava?
2) What is Ava’s realized gain (loss) on the transaction?
3) What is Ava’s recognized gain (loss)?
4) What is Ava’s basis in the warehouse?
5) What is Caddy’s realized gain (loss) on the transaction?
6) What is Caddy’s recognized gain (loss)?
7) What is Caddy’s basis in the building?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Ava owned a building held for investment worth $800,000 in which her basis was $545,000. Ava...
Ava owned a building held for investment worth $800,000 in which
her basis was $545,000. Ava owed a $320,000 mortgage on the
building. She exchanged the building for a warehouse owned by Caddy
Corp. which she intends to use in her business. Caddy assumed Ava’s
mortgage.
Caddy used the warehouse in its business and it intends to use
Ava’s land in its business. Caddy’s basis in the warehouse was
$482,000. Caddy owed a $365,000 mortgage on the building that Ava...
1.) Henrietta exchanged real property held for investment with a basis of $100,000 and a fair...
1.) Henrietta exchanged real property held for investment with a
basis of $100,000 and a fair market value of $125,000 for other
real property with a fair market value of $160,000 owned by Harry
that Henrietta planned to hold for investment. She also transferred
to Harry 100 shares of Piano, Inc. stock worth $25,000 with an
adjusted basis of $15,000. Harry’s basis in his property was
$200,000.
a.)How much is Henrietta’s realized gain and
her recognized gain?
b.)How much gain...
Henrietta exchanged real property held for investment with a basis of $100,000 and a fair market...
Henrietta exchanged real property held for investment with a
basis of $100,000 and a fair market value of $125,000 for other
real property with a fair market value of $160,000 owned by Harry
that Henrietta planned to hold for investment. She also transferred
to Harry 100 shares of Piano, Inc. stock worth $25,000 with an
adjusted basis of $15,000. Harry’s basis in his property was
$200,000. How much is Henrietta’s realized gain and her recognized
gain?
a. Realized gain: $10,000;...
Luke sold a building and the land on which the building sits to his wholly owned...
Luke sold a building
and the land on which the building sits to his wholly owned
corporation, Studemont Corp. at fair market value. The fair market
value of the building was determined to be $502,500; Luke built the
building several years ago at a cost of $375,000. Luke had claimed
$56,500 of depreciation expense on the building. The fair market
value of the land was determined to be $254,000 at the time of the
sale; Luke purchased the land many...
Ace Cards, Inc., with E&P of $79,500, distributed land held as an investment with a basis...
Ace Cards, Inc., with E&P of $79,500, distributed land held
as an investment with a basis of $21,000, subject to a mortgage of
$38,000, but worth $58,000, to a shareholder, a trust.
(a.) What adjustment is made to E&P?
(b.) What is the amount of the dividend?
(c.) What is the trust's basis in the land?
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shareholder is a corporation.
On December 31, 2018, Tube Associates owned the following securities, held as a long-term investment. The...
On December 31, 2018, Tube Associates owned the following
securities, held as a long-term investment. The securities are not
held for influence or control of the investee.
Common Stock
Shares
Cost
A Co.
2,000
$40,000
B Co.
5,000
$50,000
C Co.
1,500
$45,000
On December 31, 2019, the total fair value of the securities was
equal to its cost. In 2019, the following transactions
occurred.
Aug.1: Received $1.50 per share cash dividend on A. Co. common
stock.
Sept. 1: Sold...
On December 31, 2017, Turnball Associates owned the following securities, held as a long-term investment. The...
On December 31, 2017, Turnball Associates owned the following
securities, held as a long-term investment. The securities are not
held for influence or control of the investee.
Common Stock
Gehring Co. Wooderson Co. Kitselton Co.
Shares
2,000 5,000 1,500
Cost
$60,000 45,000 30,000
On December 31, 2017, the total fair value of the securities was
equal to its cost. In 2018, the following transactions
occurred.
Aug. 1 Sept. 1 Oct. 1 Nov. 1 Dec. 15
31
Received $0.50 per share...
On December 31, 2020, Crane Associates owned the following securities, held as a long-term investment. The...
On December 31, 2020, Crane Associates owned the following
securities, held as a long-term investment. The securities are not
held for influence or control of the investee.
Common Stock
Shares
Cost
Gehring Co.
2,000
$60,000
Wooderson Co.
5,200
36,400
Kitselton Co.
1,400
25,200
On December 31, 2020, the total fair value of the securities was
equal to its cost. In 2021, the following transactions
occurred:
Aug.
1
Received $0.50 per share cash dividend on Gehring Co. common
stock.
Sept.
1...
On December 31, 2015, Turnball Associates owned the following securities, held as a long-term investment. The...
On December 31, 2015, Turnball Associates owned the following
securities, held as a long-term investment. The securities are not
held for influence or control of the investee.
Common Stock
Shares
Cost
Gehring Co. 1,940 $58,200
Wooderson Co. 4,830 38,640
Kitselton Co. 1,600 28,800
On December 31, 2015, the total fair value of the securities was
equal to its cost. In 2016, the following transactions
occurred.
July 1 Received $1 per share semiannual cash dividend on
Wooderson Co. common stock.
Aug....
On December 31, 2020, Ivanhoe Associates owned the following securities, held as a long-term investment. The...
On December 31, 2020, Ivanhoe Associates owned the following
securities, held as a long-term investment. The securities are not
held for influence or control of the investee.
Common Stock
Shares
Cost
Gehring Co.
2,000
$64,000
Wooderson Co.
5,200
36,400
Kitselton Co.
1,800
39,600
On December 31, 2020, the total fair value of the securities was
equal to its cost. In 2021, the following transactions
occurred:
Aug.
1
Received $0.50 per share cash dividend on Gehring Co. common
stock.
Sept.
1...
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