R2 Wrong Problem lesson Record
Seciton 179 1. Land does not qualify for the Section 179 deduction. 2. Buildings do not qualify for the Section 179 deduction. Qualified improvement property, however, does qualify for Section 179. Qualified improvement property is improvements to the interior of nonresidential real property that are placed in service after the date the building was placed in service. A fire alarm system installed in an office building is qualified improvement property that qualifies for the Section 179 deduction. 3. Section 179 deduction Limitations exist when full deduction of the Section 179 amount creates or increases a loss or when qualified purchases exceed $4,000,000 for the year (2025). 4. Limitations on Immediate Expensing : 2025 allowance is $1,250,000 qualified property that is purchased and placed in service during the year. If exceeds $3,130,000 will reduced dollar by dollars. 5. Qulified real property: Business use, purchase no gift or inheritance ,and not contact-party buy. 6. Qulified improvments to the interior portion of a nonresidential building after the date the building was first place in service, including : (Roofs, Heating, ventilation,and air-conditioning, Fire protection and alarm systems ,security systems.) 7. Heavy SUVs and trucks (Over 14,000lbs) full section 179 dedction ; Heavy SUVs and trucks (Over 6000lbs GVWR but under 14,000lbs) limited to $31,300; Vehicle Under 6000lbs GVWR property only approve standard depreciation rules. Bonus 2025 40% (2018-2022 100%, 2023 80%, 2024 60%, 2025 40% , 2026 20% ) 8. Qualified property with a recovery period of 20 years or less, including qualified improvement property . A property if only qualified if the acquiring taxpayer had not preoviously used the acqiured property and the property is not acquired form a related party(no gift or inheritance). Note : New Purchae used property is qualified property.
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1. Luisa Gomez converted her personal use riding lawn mower to business use when she started her lawncare business. The mower cost $2,000, and it was worth $1,500 on the date of conversion. After taking $1,500 in depreciation deductions, Luisa sold the mower for $800. What is Luisa’s tax basis in the mower for purposes of calculating gain or loss?
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Choice "B" is correct. The $800 sales price is greater than the $500 adjusted basis at the date of the sale ($2,000 original cost basis – $1,500 accumulated depreciation), so the property is sold at a gain. The tax basis for determining a gain is the adjusted basis at the date of the sale of $500.
2.
Luisa Gomez converted her personal use riding lawn mower to business use when she started her lawncare business. The mower cost $2,500, and it was worth $1,500 on the date of conversion. After taking $500 in depreciation deductions, Luisa sold the mower for $800. What is Luisa’s tax basis in the mower for purposes of calculating gain or loss?
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3. Decker, an individual, owns 100 percent of Acre, an S corporation. At the beginning of the year, Decker's basis in Acre was $25,000. Acre had ordinary income during the year in the amount of $10,000 and a long-term capital loss in the amount of $4,000. Decker has no other capital gains or losses during the year. What amount of the long-term capital loss may Decker deduct this year?
Answer : $3,000 is correct. A deduction for a net capital loss is limited to the lesser of the net capital loss or $3,000. Decker's net long-term capital loss is $4,000, but the deduction is limited to $3,000.
4.
An individual taxpayer reported the following net long-term capital gains and losses:
Year | Gain (loss) |
1 | $(5,000) |
2 | 1,000 |
3 | 4,000 |
The amount of capital gain that the individual taxpayer should report in Year 3 is:
Answer : Y1 ($3,000) execeed ($2,000) ,Y2 offset Ordinary imcome $3000, all ($2,000 can deductible ) , Y3 Net long-term capital gain all keep $4,000.
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