a. What is the current adjusted basis of the house?
b. Mrs. Self is an employee of Bulldog Consulting and has a
nice office on the business premises; however, she finds it helpful to use one
of the bedrooms as an office to do work in the evenings and on weekends. May
the Selfs claim a deduction for depreciation?
c. Determine their recognized gain and character if they
sell the house today for $2.8 million.
d. If the property is owned by Mrs. Self instead of owned
jointly, determine their recognized gain and character if they sell the house
today for $2.8 million.
e. If the property is owned by Mrs. Self instead of owned
jointly and Mr. Self dies, will the basis of the house be increased?
f. Determine their recognized gain if they exchange the
house today for an apartment complex valued at $2.8 million. The Selfs will
purchase another house and hire someone ro manage the apartment complex.
g. If the house is destroyed by a fire when its FMV is $2.8
million and the Selfs receive $2.6 million, determine their casualty loss
deduction and gain recognized, if any. The Selfs do nor plan to purchase
another residence.
h. If the Selfs want ro purchase another principal residence
after collecting the insurance in part g. above, what is the minimum amount
they would have ro pay for the new residence to avoid recognizing any gain?
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