Farhad canceled a note issued by Emma (Farhad's niece) that arose in connection with the sale of property. At the time of thecancellation, the note had a basis to Farhad of $277,400, a face amount of $499,320, and a fair market value of $374,490.Presuming that the initial sale by Farhad qualified as an installment sale, how much gain does the cancellation result in forFarhad?13,000 X

Farhad sold a property to Emma and in return, Emma issued a note (promise to pay) to Farhad. The…

Answered: Farhad canceled a note issued by Emma…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 34CE

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Rafael sold an asset to Jamal. What is Rafael's amount realized on the sale in each of the following alternative scenarios? b. Rafael received $91,000 cash and was relieved of a $35,750 mortgage on the asset he sold to Jamal. Rafael also paid a commission of $9,400 on the transaction. Amount realized
Peter Diamond owed Carter $500,000 secured by a first mortgage on Diamond’s plant and land. Stephens was a surety on this obligation in the amount of $250,000. After Diamond defaulted on the debt, Carter demanded and received payment of $250,000 from Stephens. Carter then foreclosed upon the mortgage and sold the property for $375,000. What rights, if any, does Stephens have in the proceeds from the sale of the property?
Jessica sold goods to Stacy for $2,500 and retained a security interest in them. Two months later, Stacy filed a voluntary petition in bankruptcy. At this time, Stacy still owed Jessica $2,000 for the purchase price of the goods, the value of which was $1,500. a. May the trustee invalidate Jessica’s security interest? If so, under what provision? b. If the security interest is invalidated, what is Jessica’s status in the bankruptcy proceeding? c. If the security interest is not invalidated, what is Jessica’s status in the bankruptcy proceeding?
Andrew purchased a residential rental property for $245,000. He made a down payment of $20,000 and secured a nonrecourse loan for $225,000. Andrew defaulted on the loan when the balance of the note was $210,000 and his adjusted basis in the property after depreciation claimed was $223,000. Fair market value of the property at the time of foreclosure was $205,000. What is Andrew's realized amount from the foreclosure? $205,000 $210,000 $223,000 $225,000
A buyer purchases property for $45,000 in cash and assumes the seller's outstanding mortgage balance of $98,500. The lender executes a release for the seller. The buyer fails to make any mortgage payments, and the lender forecloses. At the foreclosure sale, the property is sold for $75,000. Based on these facts, unless state law provides anti-deficiency protection, who is liable, and for what amount? The seller is solely liable for $23,500. The buyer is solely liable for $23,500. The buyer and the seller are equally liable for $23,500. The buyer is solely liable for $30,000
Frank's Mini Mart sold a piece of equipment on an installment agreement, to a competitor on the other side of town. The other owner failed to make the payments and Frank had to repossess the equipment. What is Frank's gain or loss on repossessed personal property with a fair market value of $12,000 on the date of repossession, where the seller's basis in the installment obligation at the time of repossession is $7,500, and the costs of repossession were $500? (a) Loss of $500. (b) Gain of $4,000. (c) Gain of $4,500 (d) Gain of $5,000.
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O Sebastian originally sold his home in an installment sale for $300,000. At the time, his adjusted basis in the home was $220,000. He qualified for the Section 121 principal residence exclusion, so his gain was not included in his taxable income for the year of sale. Three years later, he repossessed the home from the buyer when the balance of the note was $275,000. He spent $8,000 on improvements and resold it within the year for $320,000. What is Sebastian's recomputed adjusted basis in the property? $228,000 $258,000 $278,000 $308,000
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