Ordinary income or loss from these transactions

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Reference no: EM131546798

Marco Polo is in the business of racing boats. For 2016 it has $5,000,000 of taxable income before the following transactions. It has nonrecaptured Sec. 1231 losses of $10,000 from 2012 and $13,000 from 2010.

A. A building with an adjusted basis of $300,000 is totally destroyed by fire. It receives insurance proceeds of $400,000 but does not plan to replace the building. It was built 12 years ago at a cost of $420,000.

B.It sold a boat storage area (undeveloped) for $50,000. It purchased the property 12 years ago for $15,000.

C.It sold a race boat for $250,000 that was purchased three years ago for $200,000. $160,000 of depreciation was taken.

D.It exchanged equipment purchased three years ago for IBM stock worth $100,000. The adjusted basis is $220,000. If straight-line depreciation was taken the adjusted basis would be $252,000.

E.On December 1 it sold Disney stock for $50,000. It purchased the stock for $112,500 on December 5, 2015.

I. What is Marco’s 2016 capital gain or loss from these transactions?

II. What is Marco’s 2016 ordinary income or loss from these transactions?

Reference no: EM131546798

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