Iorek purchased a hot-air balloon from Lee by giving him armor with a fair market value of $10,000 and assuming Lee’s remaining debt worth $15,000. When Iorek gave the armor to Lee his basis in it was $2,500. Iorek paid $1,500 towards legal fees and commissions to complete the sale. What is Iorek’s adjusted basis on the purchase?
Read DetailsLee bought a hot-air balloon 3 years ago for $8,000 cash, $34,000 loan, $1,000 legal fees, and $500 commissions. During the past 3 years, Lee depreciated the balloon $17,500. Iorek purchases the hot-air balloon from Lee by giving him armor worth $15,000 and assuming Lee’s remaining debt worth $15,000. Lee pays $2,500 towards legal fees and commissions to complete the sale. What is Lee’s recognized gain or loss on the sale?
Read DetailsAbba Zabba is a single taxpayer who purchased a home for $300,000. At the time they purchased this home, they used all of their §121 gain exclusion. After living in the home for 18 months, unforeseen circumstances caused Abba Zabba to have to move across the country. Consequently, they sold this home for $550,000. How much, if any, of their gain on the sale of this residence do they recognize in taxable income? Round all calculations to the dollar.
Read DetailsAbba Zabba is a single taxpayer who purchased a home for $300,000. At the time they purchased this home, they used all of their §121 gain exclusion. After living in the home for 16 months, unforeseen circumstances caused Abba Zabba to have to move across the country. Consequently, they sold this home for $500,000. How much, if any, of their gain on the sale of this residence do they recognize in taxable income? Round all calculations to the dollar.
Read Details