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Dean Price is self-employed and owns a manufacturing business. He bought a manufacturing equipment (7-year personal property) on 4/1/2011 for $50,000. Use half-year convention to calculate the MACRS depreciation deduction on the equipment for 2011 and 2012 He also has a pick-up truck used for business (5-year recovery period) acquired on 10/1/2011 for $25,000. On 11/15/2012, he sold the pick-up truck for $24,000. Use the half-year convention to calculate the MACRS depreciation on the truck for 2011 and 2012. On 10/26/2012 Dean sold his old storage building used for his business for $220,000. He purchased the building in 2001 for $100,000. Total depreciation taken on the building is $20,000. His 2012 Business income and expenditures (Schedule -C): Sales $655,000 Cost of goods sold $ 315,000 Other business expenses (incl. 2012 deprecation taken on the storage building) $ 140,000 In 2012 Dean also sold various assets. The information about the selling price and tax basis of the property is listed below. Asset Sold Initial Basis 2012 Depreciation Amount Accumulated Depreciation 4/4/11 10/16/12 $3,000 $375 $825 $2,900 3/1/10 11/8/12 $8,000 $1,000 $2,200 $4,000 Marketable securities 2/1/12 12/1/12 $12,000 $0 $0 $20,000 Land held for investment 7/1/11 11/29/12 $45,000 Black leather sofa (used in office) Office chairs Placed in Service (or purchased) $0 Selling Price $0 In 2012 Dean sold his wine collection for $9,000, which is bought two years ago for $8,000. He also has a short-term capital loss carryover of $10,000 from 2009. 1 $48,000 Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ Class time: ____________ 1. Use the worksheet below to calculate the MACRS depreciation amount for the manufacturing equipment and pick truck: 2011: Business Asset Date Acquired Date Disposed Basis for applying MACRS MACRS percentage 2011 MACRS Depreciation Deduction Date Acquired Date Disposed Basis for applying MACRS MACRS percentage 2012 MACRS Depreciation Deduction Business Equipment Pick-up Truck 2012: Business Asset Business Equipment Pick-up Truck 2 Accumulated Depreciation Adjusted Basis Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ Class time: ____________ 2. Summary Sheet for the Sales of Business Property (Form 4797) I) Sales or Exchanges of Property Used in a Trade or Business (Held for More Than 1 Year) Description of property Date acquired Date Sold Gross Sales Price Depreciation allowed Cost/Adjusted Basis Gain or (loss) A) B) C) D) II) Ordinary Gains and Losses (incl. property held 1 year or less). Enter zero if not applicable. Description of property Date acquired Date Sold Gross Sales Price Depreciation allowed Cost/Adj. Basis Gain or (loss) III) Gain from Disposition of Property Under Sections 1245 and 1250 a. Descriptions of section 1245 property: 1) Description of property 3 2) 3) 4) 5) 6) Date acquired Date Sold Gain Depreciation allowed Amount of Gain reported as Ordinary Income 7) Remaining Gain = (4) – (6) Property Transactions: Tax Return Due Tu 3/4/14 4 Name: ___________ Class time: ____________ Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ Class time: ____________ (Continued) Summary Sheet for the Sales of Business Property (Form 4797) b. Description of section 1250 property 1) Description of property 2) 3) 4) 5 6) Date acquired Date Sold Gain Depreciation allowed Amount of Gain reported as 25% rate Capital gain 7) Remaining Gain = (4) – (6) IV) Section 1231 Netting Process 1. Total amount reported on part I. (page 3) __________________________ 2. Total ordinary income reported on III.a _______________________ 3. Subtract line 2 from line 1, this is the amount of the remaining Section 1231 Gain ____________ 5 Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ Class time: ____________ 3. Summary Sheet on the Sales of Capital Assets (Form 8949) I. Short-term Description of property Date acquired Date Sold Gross Sales Price Depreciation allowed Cost Basis Gain or (loss) Date acquired Date Sold Gross Sales Price Depreciation allowed Cost Basis Gain or (loss) II. Long-term Description of property 6 Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ Class time: ____________ 4. Summary Sheet for Capital Gains and Losses (Schedule D) 1.Short-term totals from Form 8949 (page 5) 2.Long-term totals from Form 8949 (page 5) 3.Long-term totals from Form 4797, part IV). 3 on page 4 Short-term Capital Gains/Losses and capital loss carryovers Long-term Capital Gain 28% Net Capital Gain/Losses ____________ 7 25% 15% Property Transactions: Tax Return Due Tu 3/4/14 8 Name: ___________ Class time: ____________ Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ Class time: ____________ 5. Tax Computation 1. Compute the self-employment tax for Dean Price in 2012 Social security tax = 113,700*12.4% = Medicare tax = Schedule-C income*92.35%*2.9%= 2. What is the amount of AGI for Dean Price in 2012? 3.Assume that he has items deduction of $33,000 and claims one personal exemption. What is his 2012 taxable income? The personal exemption amount for 2012 is $3,800. 9 Property Transactions: Tax Return Due Tu 3/4/14 Name: ___________ A. Capital Gains: 1) Net 15% Rate Long-term capital gain _____________ 2) Net Unrecaptured Section 1250 Gain (25% Rate Gain) _____________ 3) Net Collectibles Gain _____________ B. Ordinary Income Computation 1) Realized Gain from disposition of property under Section 1245 ________ 2) Total ordinary income (including the amount in B.1 above) : C. Tax Computation 1) Tax on ordinary income (schedule X): ____________ 2) Total Tax on Capital Gains: _____________ 3) Self-Employment Tax: __________________ Add C.1 C.2 and C.3. This is the Total Tax : ___________ 10 ____________ Class time: ____________

Dean Price is self-employed and owns a manufacturing business.
He bought a manufacturing equipment (7-year personal property) on 4/1/2011 for $50,000. Use half-year
convention to calculate the MACRS depreciation deduction on the equipment for 2011 and 2012
He also has a pick-up truck used for business (5-year recovery period) acquired on 10/1/2011 for
$25,000. On 11/15/2012, he sold the pick-up truck for $24,000. Use the half-year convention to calculate
the MACRS depreciation on the truck for 2011 and 2012.
On 10/26/2012 Dean sold his old storage building used for his business for $220,000. He purchased the
building in 2001 for $100,000. Total depreciation taken on the building is $20,000.
His 2012 Business income and expenditures (Schedule -C):
Sales

$655,000

Cost of goods sold
$ 315,000
Other business expenses (incl. 2012 deprecation taken on the storage building) $ 140,000

In 2012 Dean also sold various assets. The information about the selling price and tax basis of the
property is listed below.

Asset

Sold

Initial
Basis

2012
Depreciation
Amount

Accumulated
Depreciation

4/4/11

10/16/12

$3,000

$375

$825

$2,900

3/1/10

11/8/12

$8,000

$1,000

$2,200

$4,000

Marketable
securities

2/1/12

12/1/12

$12,000

$0

$0

$20,000

Land held for
investment

7/1/11

11/29/12

$45,000

Black leather sofa
(used in office)
Office chairs

Placed in
Service (or
purchased)

$0

Selling
Price

$0

In 2012 Dean sold his wine collection for $9,000, which is bought two years ago for $8,000.
He also has a short-term capital loss carryover of $10,000 from 2009.

1

$48,000

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

Class time: ____________

1. Use the worksheet below to calculate the MACRS depreciation amount for the manufacturing
equipment and pick truck:

2011:
Business
Asset

Date
Acquired

Date
Disposed

Basis for
applying
MACRS

MACRS
percentage

2011 MACRS
Depreciation
Deduction

Date
Acquired

Date
Disposed

Basis for
applying
MACRS

MACRS
percentage

2012 MACRS
Depreciation
Deduction

Business
Equipment

Pick-up
Truck

2012:
Business
Asset

Business
Equipment

Pick-up
Truck

2

Accumulated
Depreciation

Adjusted
Basis

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

Class time: ____________

2. Summary Sheet for the Sales of Business Property (Form 4797)
I) Sales or Exchanges of Property Used in a Trade or Business (Held for More Than 1 Year)

Description
of property

Date
acquired

Date Sold

Gross Sales
Price

Depreciation
allowed

Cost/Adjusted
Basis

Gain or (loss)

A)

B)

C)

D)

II) Ordinary Gains and Losses (incl. property held 1 year or less). Enter zero if not applicable.
Description
of property

Date
acquired

Date Sold

Gross Sales
Price

Depreciation
allowed

Cost/Adj.
Basis

Gain or
(loss)

III) Gain from Disposition of Property Under Sections 1245 and 1250
a. Descriptions of section 1245 property:
1)
Description
of property

3

2)

3)

4)

5)

6)

Date
acquired

Date
Sold

Gain

Depreciation
allowed

Amount of
Gain
reported as
Ordinary
Income

7)
Remaining
Gain =
(4) – (6)

Property Transactions: Tax Return Due Tu 3/4/14

4

Name: ___________

Class time: ____________

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

Class time: ____________

(Continued) Summary Sheet for the Sales of Business Property (Form 4797)
b. Description of section 1250 property
1)
Description
of property

2)

3)

4)

5

6)

Date
acquired

Date Sold

Gain

Depreciation
allowed

Amount of
Gain
reported as
25% rate
Capital gain

7)
Remaining
Gain =
(4) – (6)

IV) Section 1231 Netting Process
1. Total amount reported on part I. (page 3) __________________________
2. Total ordinary income reported on III.a _______________________
3. Subtract line 2 from line 1, this is the amount of the remaining Section 1231 Gain ____________

5

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

Class time: ____________

3. Summary Sheet on the Sales of Capital Assets (Form 8949)
I. Short-term
Description
of property

Date
acquired

Date Sold

Gross Sales
Price

Depreciation
allowed

Cost Basis

Gain or
(loss)

Date
acquired

Date Sold

Gross Sales
Price

Depreciation
allowed

Cost Basis

Gain or
(loss)

II. Long-term
Description
of property

6

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

Class time: ____________

4. Summary Sheet for Capital Gains and Losses (Schedule D)

1.Short-term totals from Form 8949 (page 5)
2.Long-term totals from Form 8949 (page 5)
3.Long-term totals from Form 4797, part IV). 3 on
page 4

Short-term Capital
Gains/Losses and
capital loss carryovers

Long-term Capital Gain

28%

Net Capital Gain/Losses ____________

7

25%

15%

Property Transactions: Tax Return Due Tu 3/4/14

8

Name: ___________

Class time: ____________

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

Class time: ____________

5. Tax Computation
1. Compute the self-employment tax for Dean Price in 2012
Social security tax = 113,700*12.4% =
Medicare tax = Schedule-C income*92.35%*2.9%=

2. What is the amount of AGI for Dean Price in 2012?

3.Assume that he has items deduction of $33,000 and claims one personal exemption. What is his 2012
taxable income? The personal exemption amount for 2012 is $3,800.

9

Property Transactions: Tax Return Due Tu 3/4/14

Name: ___________

A. Capital Gains:

1) Net 15% Rate Long-term capital gain

_____________

2) Net Unrecaptured Section 1250 Gain (25% Rate Gain) _____________
3) Net Collectibles Gain _____________
B. Ordinary Income Computation

1) Realized Gain from disposition of property under Section 1245 ________
2) Total ordinary income (including the amount in B.1 above) :
C. Tax Computation

1)

Tax on ordinary income (schedule X):

____________

2) Total Tax on Capital Gains: _____________
3) Self-Employment Tax: __________________

Add C.1 C.2 and C.3. This is the Total Tax : ___________

10

____________

Class time: ____________

Interested in a PLAGIARISM-FREE paper based on these particular instructions?...with 100% confidentiality?

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