Answer:
(a) he total realized gain is $1,123,200.
(b) § 1250 gain realized in 2019 is, $276,480.
(c) The § 1231 gain realized in 2019 is, $77040.
Step-by-step explanation:
(a)
Compute Skylar's total realized gain under the installment sales method as follows:
Cash Received = $144,000
Note Receivable = $1,440,000
Total Selling Price = Cash Received + Note Receivable
= $144,000 + $1,440,000
= $1,584,000
Cost of Property = $1,152,000
Deducted Depreciation = $691,200
Adjusted Bias = Cost of Property - Deducted Depreciation
= $1,152,000 - $691,200
= $460,800
Total Realized Gain = Total Selling Price - Adjusted Bias
= $1,584,000 - $460,800
= $1,123,200
Thus, the total realized gain is $1,123,200.
(b)
§ 1250 gain will be same as the amount of depreciation that was in excess of the straight-line amount.
Thus, § 1250 gain realized in 2019 is, $276,480.
(c)
Total Realized Gain = $1,123,200
§ 1250 gain realized in 2019 = $276,480
§ 1231 gain = Total Realized Gain - § 1250 gain realized in 2019
= $1,123,200 - $276,480
= $846,720
The total selling price was, $1,584,000.
Compute the percentage of § 1231 gain of the selling price as follows:
§
Thus, 53.5% of the cash received will be the § 1231 gain.
§ 1231 gain realized in 2019 = $144,000 × 53.5% = $77,040.
Thus, the § 1231 gain realized in 2019 is, $77040.
