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olganol [36]
3 years ago
9

Larry Gaines, a single taxpayer, age 42, sells his personal residence on November 12, 2019, for $151,200. He lived in the house

for 7 years. The expenses of the sale are $9,072, and he has made capital improvements of $10,150. Larry’s cost basis in his residence is $86,750. On November 30, 2019, Larry purchases and occupies a new residence at a cost of $150,000. Calculate Larry’s realized gain, recognized gain, and the adjusted basis of his new residence.
Business
1 answer:
damaskus [11]3 years ago
3 0

Answer:

1. Recognized gain = $54300

2. Realized gain = $45228

3. Adjusted basis of new asset = $150,000

Explanation:

The adjusted basis is the net cost of an asset after it has had depreciation deductions and/or capital expenditure increments. In other words, its actual worth at that particular point in time.

The amount realized is the fair market value and the sum of any money received at the sale of an asset.

1. A recognized gain or loss is the difference between the amount realized from the sale of the asset and the asset's adjusted basis on the time of its sale. A positive figure proves to be a gain and a negative figure proves to be a loss. In other words, when an asset is sold for a price higher than what it is actually worth at the time of sale, it is a recognized gain whilst if it is sold for a price lower than what its net cost is, it is a recognized loss.

In the current scenario:

The amount realized from the sale of the asset is $151,200.

Adjusted basis = Cost basis + capital improvements

Hence, $86,750 + $10,150 = $96900

Recognized gain/loss = $151,200 - $96900 = $54300

Due to the fact that it is a positive figure, i.e. amount realized at sale of asset is higher than the adjusted basis, it is a recognized gain.

2. A realized gain is the amount of <em>actual money</em> earned at sale. It does not simply look at the income from sale, but also takes into account any expenses that were present at the time of sale and deducts these.

In this case, there was an expense of the sale of $9072.

Hence, amount realized from sale of asset is $151200 - $9072 = $142128

Realized gain = $142128 - $96900 = $45228

3. Adjusted basis of new residence

The new residence has not had any capital increments. Hence, the adjusted basis is the same as the cost i.e. $150,000.

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A key underlying assumption of MM Proposition I without taxes is that: corporations are all-equity financed. individuals can bor
MrRa [10]

Answer:

C.  Individuals and corporations borrow at the same rate.

Revised Question:

A key underlying assumption of MM Proposition I without taxes is that:

A.  financial leverage increases risk.

B.  individuals can borrow at lower rates than corporations.

C.  individuals and corporations borrow at the same rate.

D.  managers always act to maximize the value of the firm.

E.  corporations are all-equity financed.

Explanation:

Modigilani-Miller gave theories about the optimal capital structure of the firms. They proposed thier theories under <em>taxes and and without taxes</em> economies. They gave two propositions under each economy.

MM proposition I without taxes states that value of of firm with equity finance and value of a firm with debt finance are equal. So the capital structure of a firm is irrelevant in decision making.

The underlying assumption of the proposition is:

Presence of asymmetric information due to which, investor's and firm's cost of borrowing money is same.

5 0
3 years ago
What other replacements for unions have helped reduce union membership?
kicyunya [14]
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3 years ago
The Wayne City Council approved and adopted its budget for 2016. The budget contained the following amounts: Estimated revenues
Vilka [71]

Answer: The budgetary fund balance is $10,000

Explanation: When calculating budgetary fund balance, the best method is given as:

The available fund balance (from previous audit) + current year revenues = Total available funds - expenditures = current year ending fund balance

What we can see from the above expression is that we add the fund from the previous year balance to the current year revenues. This will give us amount of total funds available. Now we will minus the current year expenditures from the total funds available to give us the budgetary fund balance of the current year.

From the question above, we have the following:

Estimated revenues = $700,000

Appropriations (expenditures) = $660,000

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Total expenditures = $660,000 + $30,000 = $690,000

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Estimated revenues - total expenditures

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3 years ago
the common stock of salazar insurance pays a constant annual dividend of $4.80 per share. what is one share of this stock worth
kotegsom [21]

Market Price =$36.09,is one share of this stock worth at a discount rate of 13.3 percent.

<h3>Common stock: What does that mean?</h3>

A security that symbolizes ownership in a firm is called common stock. Common stock owners choose the executive board and cast ballots for corporate rules. This kind of stock ownership frequently offers better long-term rates of return. Common stock is not subject to either assets or liabilities.

<h3>How are shares & common stock different from one another?</h3>

Definition: The term "stock" refers to the holder's interest in one or more businesses. A single share of interest in a firm is referred to as a "share" in contrast. For instance, if X has stock investments, X may have a collection of shares from various companies.

<h3>Briefing:</h3>

Market price = dividends per share

P0 = $4.80/.133

P0 = $36.09

Market Price =$36.09

To know more about common stock visit:

brainly.com/question/13762106

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What line on a production possibilities curve shows the amounts of goods produced?
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The line on a production possibilities curve that shows the amounts of goods produced is called production possibilities frontier. 
6 0
3 years ago
Read 2 more answers
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