Facts and information below are needed to resolve questions 27 through 28: Jim R
ID: 2437517 • Letter: F
Question
Facts and information below are needed to resolve questions 27 through 28:
Jim Realty LLC, a partnership owned entirely by individuals, sells an apartment building for $24,725,000. The basis of the building immediately prior to the sale is as follows:
27. Using the above information, determine the gain or loss on the sale of the apartment building to the individual owners. 28. Assuming that the allocation of the selling price is $3,500,000 to land, $14,475,000 to building and $25,000 to furniture and fixtures, prepare an estimate of the total taxes for the owners on the sale.
Original Cost - Unadjusted Tax Basis Accumulated Depreciation Land 3,000,000 - Building 12,500,000 (1,900,000) Furniture & Fixtures 75,000 (65,000)Explanation / Answer
27). Total of Original Cost of Land , Building and Furnitures and fixtures:
= $3,000,000 + $12,500,000 + $75,000
= $15,575,000.
Total Of Accumulated Depreciation:
= $1,900,000 + $65,000
= $1,965,000
Net Value after Depreciation = $13,610,000
Gain on Sale of the apartment building = $24,725,000 - $13,610,000 = $11,115,000
28). Gain on Individual assets:
Land = $3,500,000 - $3,000,000 = $500,000
Building = $14,475,000 - ($12,500,000 - $1,900,000) = $3,875,000
Furniture and Fixtures = $25,000 - ($75,000 - $65,000) = $15,000
Now you can calculate the tax on the individual assets based on the gain calculated above.
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