Mario is a real estate and financial consultant who owns and operates his own business as a sole proprietor. His adjusted gross income, excluding the items below, is $48,000. The following information relates to his current-year activities and income tax.
a.
Land adjacent to his office was purchased in 2019 for an anticipated expansion. It cost $10,000 but is sold later in the year for $17,000.
?
?
b.
His office building is sold for $250,000 in anticipation of moving to a different location. The building was purchased in 1994 for $200,000, with 10% of the cost allocated to the land. Depreciation taken on the building was $100,000.
?
?
c.
Office furniture that cost $20,000 and was fully depreciated is sold for $6,000.
?
?
d.
A color copier purchased two years ago for $50,000 is traded for 200 shares of Microsoft stock that were worth $24,000 on the date of the exchange. The copier had a basis to Mario of $35,000 but is worth only $24,000 on the date of the exchange.
?
?
e.
Mario's automobile, which he used 100% for business and had cost him $18,000 in 2010, is sold for $8,000. Depreciation of $6,000 had been taken on the automobile.
?
REQUIRED: Fill in the following table by listing the amount and proper treatment of the recognized gain or loss
from each of the above transactions. Identify by letters a–e.
Ordinary
Sec. 1231
Capital Gain (Loss)
Unrecaptured
Income
Gain (Loss)
Short-term/Long term
Sec. 1250 Gain
a.b.c.d.e.What is Mario's net capital gain (loss) for the current year?
?
What will be an ideal response?
| ? | Ordinary | Sec. 1231 | Capital Gain (Loss) | Unrecaptured |
| ? | Income | Gain (Loss) | Short-term/Long-term | Sec. 1250 Gain |
| a. | $7,000 | ? | ? | |
| b. | ? | 5,000 Land | ? | |
| ? | ? | $45,000 Building | ? | $100,000 Building |
| ? | ? | |||
| c. | $6,000 | ? | ? | |
| d. | ? | $(11,000) | ? | |
| ? | ? | ? | ? | |
| e. | ? | $(4,000) | ? | |
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