During 2017, Golsen Corporation, a calendar year C corporation, sold the followi

Question

During 2017, Golsen Corporation, a calendar year C corporation, sold the following business assets on the dates listed below. Compute the amount and character of the gain or loss Golsen Corporation must report from the disposition of each asset. Then determine the sum of each type of gain or loss and the net effect these gains and losses have on Golsen Corporation's 2017 taxable income. Assume that Golsen has no Section 1231 losses in prior years. Please show your work and explain your calculations. Asset Acquired Sold Cost Adiusted Sales rice Cost Recovery Basis 1/13/16 5/16/2017 $208,000 $74,880 $133,120 $180,000 2/25/07 11/25/2017 $296,000 $296,000 Computer Copiers Office equipment 8/10/13 3/10/2017 $160,000 $117,160 $42,840 $40,000 Office building Land $0 $60,000 7/23/10 2/12/2017 $320,000 $60,000 $260,000 $400,000 7/23/10 2/12/2017 $80,000 $0 $80,000 $100,000

Explanation / Answer

Gain and loss Golsen Corporation must report from disposition of each asset is provided below:

Particulars

Amount ($)

Amount ($)

Computer

Sale price

180000

Less: Adjusted cost basis

133120

Gain on sale of computer

46880

Copiers

Sale price

60000

Less: Adjusted basis

0

Gain on sale of copiers

60000

Office equipment

Sale price

40000

Less: Adjusted basis

42840

Loss on sale of office equipment

(2840)

Office building

Sale price

400000

Less: Adjusted basis

260000

Gain on sale of office building

140000

Land

Sale price

100000

Less: Adjusted basis

80000

Gain on sale of land

20000

Net gain or loss from disposition of all assets of Golsen Corporation:

Particulars

Amount ($)

Amount ($)

Computer

Sale price

180000

Less: Adjusted cost basis

133120

Gain on sale of computer

46880

Copiers

Sale price

60000

Less: Adjusted basis

0

Gain on sale of copiers

60000

Office equipment

Sale price

40000

Less: Adjusted basis

42840

Loss on sale of office equipment

(2840)

Office building

Sale price

400000

Less: Adjusted basis

260000

Gain on sale of office building

140000

Land

Sale price

100000

Less: Adjusted basis

80000

Gain on sale of land

20000

Net gain from sale of assets

264040

Thus, the net taxable income of Golsen Corporation as a result of sale of these assets will be increased by $264040.

Particulars

Amount ($)

Amount ($)

Computer

Sale price

180000

Less: Adjusted cost basis

133120

Gain on sale of computer

46880

Copiers

Sale price

60000

Less: Adjusted basis

0

Gain on sale of copiers

60000

Office equipment

Sale price

40000

Less: Adjusted basis

42840

Loss on sale of office equipment

(2840)

Office building

Sale price

400000

Less: Adjusted basis

260000

Gain on sale of office building

140000

Land

Sale price

100000

Less: Adjusted basis

80000

Gain on sale of land

20000

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