Concept explainers
State whether the equipment is a capital asset.
Explanation of Solution
Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.
Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the
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Chapter 17 Solutions
Individual Income Taxes
- John Peter is aware that there is no Capital Gains tax in Barbados. He decided to buy a large piece of land. The land was hilly, so he blasted it to make it flatter, installed a soakaway so the water does not settle on the land, and made several roadways for ease of access. After 6 months of purchasing the land, he subdivided the land and sold it to 30 separate persons making a large gain. Advise Mr. Peter whether the gains are taxable in Barbados and state the appropriate case laws.arrow_forwardChuck sold a tractor to a dealer for $16,000. He bought the tractor for $25,500 several years ago and has claimed $12,000 of depreciation deduction on the tractor. What is the amount and character of his gain or loss from the sale of the tractor?arrow_forwardJohn Peter is aware that there is no Capital Gains tax in Jamaica. He decided to buy a large piece of land. The land was hilly, so he blasted it to make it flatter, installed a soak away so the water does not settle on the land and made several roadways for ease of access. Six months after he purchased the land, he subdivided the area and sold it in lots to 30 separate persons, thereby making a large gain. Required Advise Mr. Peter how these gains would be treated for tax purposes in Jamaica. Appropriate case laws should be included in your answer.arrow_forward
- Liv wishes to acquire some undeveloped land as an investment. She is unable to pay the whole purchasing price. Instead, Olivia pays the landowner $51,900 in exchange for a four-year option to purchase the land for $1,038,000. Olivia sells the option for $64,875, fourteen months after obtaining it. What is Olivia's capital gain, and what is the nature of it? She has made a $ long-term taxable profit.arrow_forwarda. John Peter is aware that there is no Capital Gains tax in Barbados. He decided to buy a large piece of land. The land was hilly, so he blasted it to make it flatter, installed a soakaway so the water does not settle on the land, and made several roadways for ease of access. After 6 months of purchasing the land, he subdivided the land and sold it to 30 separate persons making a large gain. Advise Mr. Peter whether the gains are taxable in Barbados. Appropriate case laws should be referenced in your assessment. b. ABC made the following supplies for sale in January 2020: ABC Juice Limited manufactures and sells juice locally in St. Lucia and in the Caribbean. The business is VAT registered with tax authorities in St. Lucia. The company has recorded the following transactions in January 2020: - Sales to local customers - $1,300,000 (VAT inclusive) - Sales to local customers - $1,000,00 (VAT exclusive) - Sales to customers located abroad - $700,000 - Purchases…arrow_forwardSally is an employee of Blue Corporation. Last year, she purchased a very expensive computer with her own funds. She used the computer 100% for business purposes. During the current year, the computer was completely destroyed in a fire. Blue Corporation did not reimburse her for her loss. Discuss whether Sally’s loss will create or increase Sally’s net operating loss. How does Sally treat the loss (carryback or/and carryforward periods)? If a taxpayer who sustains a casualty loss in an area designated by the President of the United States as a disaster area, he or she may take the loss in the year in which the loss occurred or elect to take the loss in the previous year. Identify factors that should be considered in deciding in which year to take the lossarrow_forward
- Zeke, a wealthy farmer, constructed a barn in March 1986 for $10,000. He claimed $6,500 of accelerated depreciation while straight-line depreciation would have been only $5,600. He sells the barn for $8,900. If he had no other ID: 4548905 ection 1231 transactions, what gain would be recognized from this sale? Include both the amount and the nature of the gain.arrow_forwardCallie Cooper purchased two pieces of property in 1990: Property Q cost $15,000 and Property R cost $30,000. In 2020, when Callie died, she left the property to her daughter, Christy. At that time, Property Q had appreciated in value to $80,000 while Property R had declined in value, now worth only $10,000. What is Christy’s basis in each piece of property? What are the tax consequences of the changes in value of the properties from the time of original purchase to the death of Callie?arrow_forwardIn a community property state, John marries Patricia prior to marriage John owned an SUV during the marriage John bought a Buick. John and Patricia bought a second property with money earned from Patricia's job. Each individual received a motorcycle from Patricia's uncle as a gift. What is community property in this marraige?arrow_forward
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- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT