Strayer-University ACC 307 Week 8 Homework 2

Hannah Tywin owns 100 shares of MM Inc. stock. 12 per share. What is the amount and character of Hannah’s recognized gain or loss on the stock? Identify each of White Corporation’s following assets as an ordinary, capital, or §1231 asset. Two years ago, White used its excess cash to purchase a piece of land as an investment. Two years ago, White purchased land and a warehouse. It uses these assets in its business. Manufacturing machinery White purchased earlier this year. Inventory White purchased 13 months ago but is ready to be shipped to a customer. Office equipment White has used in its business for the past three years. 1,000 shares of stock in Black corporation that White purchased two years ago because it was a good investment. 100,000 of depreciation deductions against the asset. Hart has a marginal tax rate of 30 percent. Enter NA if a situation is not applicable.

Leave no answer blank. What effect does the sale have on Hart’s tax liability for the year? What effect does the sale have on Hart’s tax liability for the year? Enter NA if a situation is not applicable. Leave no answer blank. What effect does the sale have on Hart’s tax liability for the year? Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable. What effect does the sale have on Hart’s tax liability for the year? Now assume that Hart is a corporation. What effect does the sale have on Hart’s tax liability for the year (assume the same 30 percent marginal tax rate)? Now assuming that the asset is real property, which entity type should be used to minimize the taxes paid on real estate gains? 50,000 of §1231 gain. 50,000 taxed at a maximum 25% rate. As can be seen from parts (d) and (e), any noncorporate form will result in a lower tax on sales of real property. This is because unrecaptured §1250 gain is taxed at a maximum rate of 25 percent for noncorporate taxpayers while corporate taxpayers recognize ordinary gains. 3,000. (Loss amounts should be indicated by a minus sign. Leave no answer blank. What gain or loss does Deirdre recognize on the sale? 600 loss, she is not allowed to recognize any of the loss because she sold the stock to a related party (her brother). What is the amount and character of the gain or loss Moran will recognize on the sale in each of the following alternative situations? Loss amounts should be indicated by a minus sign. 145,000. (Leave no answer blank. 110,000. (Leave no answer blank.

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