Reference no: EM132806130

Question - Jim Realty LLC, a partnership owned entirely by individuals, sells an apartment building for $15,500,000. The basis of the building immediately prior to the sale is as follows:

Original Cost - Unadjusted Tax Basis:

Land 3,000,000

Building 12,500,000

Furniture & Fixtures 75,000

Accumulated Depreciation:

Building (2,900,000)

Furniture & Fixtures (65,000)

Required -

1. Using the above information, determine the gain or loss on the sale of the apartment building to the individual owners.

2. Assuming that the allocation of the selling price is $3,500,000 to land, $11,950,000 to building and $50,000 to furniture and fixtures, estimate the total taxes for the owners on the sale.

3. If possible, pick an alternative allocation of the sales price to assets such that there would be a reduction in the total taxes and estimate the taxes based on your assumptions.