This year, Sinal Corp. generated $745,000 of income fromordinary business operations. In additions, the company sold thefollowing assets, all of which were held for more than 12months.
Initial Basis
Accumulated Depreciation
Sale Proceeds
Machinery
89.400
17,880
60,000
Office Equipment
50,000
19,390
47,500
Warehouse
163,000
16,720
165,000
Investment Securities
72,300
0
80,100
Investment Land
250,000
0
208,000
Required:
a. Calculate Sinai’s gain or loss realized and recognized oneach asset sale.
b. Calculate depreciation recapture and determine the characterof the gains and losses.
c. Determine Sinai’s net capital gain or loss.
d. Calculate Sinai’s taxable income.
e. How would your answers to parts (a) through (d) change if theland had been used in Sinai’s business rather than held as aninvestment?
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