Problem 17-45 (LO. 2, 3, 5) Anna received tangible personal property with a fair
ID: 2789952 • Letter: P
Question
Problem 17-45 (LO. 2, 3, 5) Anna received tangible personal property with a fair market value of $65,000 as a gift in 2015. The donor had purchased the property for $77,000 and had taken $77,000 of depreciation. Anna used the property in her business. Anna sells the property for $23,000 in 2017 Indicate whether the following statements are "True" or "False" regrading the tax status when Anna sells the property. ·The property is a § 1231 asset for Anna. . Anna's carryover basis was $65,000. ·The property has § 1245 depreciation recapture potential of a. True False $77,000. b, when she sells the property for $23,000, how much of the gain, if any, is § 1245 depreciation recapture?Explanation / Answer
a.
1.
Te property use for business is reported in form 1231. Here Since, Anna use the assets for her business, so the assets must be reported in form 1231. Also only used property (atleat for one year) is reported under this form.
So, statement is true.
2. Marrket value during transfer of assets is $65,000. So basis for anna would be equal to $65,000.
Statement is true.
3.
under form 1245, gain on disposal of assets are recorded. Purchase price of assets is $77,000 and depreciation recapture is $77,000. Current mrket value of assets is $65,000. So gain on disposal of assets is $65,000.
So statement is false.
if she sells the property for $23,000, then the sale value of $23,000 should be reported in form 1245.