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Carlos owns equipment with an $800,000 acquisition cost, a
$270,000 adjusted basis, and a $500,000 FMV. Carlos makes a gift of the equip –
ment to a charitable organization. The equip – ment is used by the charity in
its exempt function. What is the amount of his charitable contribution
deduction?

Ted owns a warehouse that cost $850,000 in 1984 and is
subject to depreciation recapture under Sec. 1245. The warehouse, which has an
adjusted basis of zero, is destroyed by a tornado and Ted receives $580,000
from the insurance company. Within nine months, he pays $500,000 for a new
warehouse and an election is made to defer the gain under Sec. 1033. What is
the amount and character of Ted’s recognized gain?

1.When a taxpa yer disposes of oil, gas, or geothermal
property, part or all of the gain may be recaptured as ordinary income. Explain
how the recapture amount is determined for oil and gas and geothermal
properties.
2. William owns nvo appreciated assets, land and a building,
which have been used in his trade or business since purchased in 1990. If he
sells the two assets to his 100% -owned corporation, will William have to
recognize any ordinary income? Explain.

Six years ago Joelle started raising chinchillas. She
separates her chinchillas into nvo groups, a breeding group and a market group.
During the year, she had the following sales of chinchillas from her market
group: 400 ro producers of fur products; 100 to per stores; and 25 to
individuals to use as pets. From her breeding stock, she sold six chinchillas
to Rebecca, an individual who is starting a chinchilla ranch, and five to Fur
Pelts, a producer of fur products. All 11 chinchillas from the breeding group
have been held for at least 22 months, and the five sold to Fur Pelts were poor
performers.

Sec. 1231 Cains and Losses. Vivian’s AGI is $40,000 without
consider ing the gains and losses below. Determine her revised AGI after the
inclusion of any applicable gains or losses for the following independent
cases. Assume she has no nonrecaptured net Sec. 1231 losses at the beginning of
the year.

Sec. 1231 Cains and Losses. Edith, who has no other sales or
exchanges and no nonrecaptured Sec. 1231 losses, sells three tracts of land
that are used in her trade or business. Edith
is single, and her taxab le income is $120,000 without
considering the following sales.
Asset #1- $15,000 gain and holding period of 20 months
Asset #2- $17,000 loss and holding period of 25 months
Asset #3- $ 5,000 gain and holding period of 13 months
a. What is the increase in her taxes as a result of the
three sales?
b. If the holding period for Asset #2 is nine months, what
is the decrease in her taxes as a
result of the three sales?
c. Same as part a except her taxable income is $500,000.

Sec. 1231 Transactions. During the current year, Sean’s
office building is destroyed by fire. After collecting the insurance proceeds,
Sean has a $50,000 recognized gain. The building was acquired in 1998, and the
straight -line method of depreciation has been used. He does not plan to
acquire a replacement building. In addition to the gain on the building,
consider the following independent cases and determine his total net capital
gain. For each case, include the $50,000 casualty gain described above.
a. Land used in his trade or business and held more than a
year is condemned by the state. The recognized gain is $60,000.
b. Assume the same facts as in Part a, except the
condemnation results in a $60,000 loss.
c. An apartment building used as residential rental property
and held more than one year is destroyed by a sudden, unexpected mudslide. The
building is not insured, and the loss amounts to $200,000.

Sec. 1245. The Pear Corporation owns equipment with a
$300,000 adjusted basis. The equipment was purchased six years ago for
$650,000. If Pear sells the equipment for the selling prices given in the three
independent cases below, what are the amount and character of Pear’s recognized
gain or loss?

Sec. 1245. Elizabeth owns equipment that cost $500,000 and
has an adjusted basis of $230,000. If the straight -line method of depreciation
had been used, the adjusted basis would be $300,000.
a. What is the maximum selling price that she could sell the
equipment for without having to recognize Sec. 1245 ordinary income?
b. If she sold the equipment and had to recognize $61,000 of
Sec. 1245 ordinary income, what was the selling price?

Exchange of Sec. 1245 Property. General Corporation owns
equipment which cost $70,000 and has a $44,000 adjusted basis. General
exchanges the equipment in June of 2019 for other equipment ($52,000 FMV) and
marketable securities ($30,000 FMV). Determine the following:
a. Realized gain
b. Recognized gain
c. Gain treated as ordinary income
d. Gain treated as Sec. 1231 gain
e. Basis of marketable securities received
f. Basis of equipment received