Question as a tax practitioner you frequently get people

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Question :

As a tax practitioner, you frequently get people asking questions concerning the tax effect of property transactions. This year is no exception. You've had individual clients ask you the subsequent questions: I had some industry property that was destroyed by a fire. I expected payment on the property by the insurance company equal to the full fair market worth of the property, which was higher than its adjusted basis. I took the insurance proceeds and purchased a new piece of property, but the property purchased cost fewer than the amount of the payment from the insurance company.

My corporation sold some depreciable property (a machine) this year. The amount realized on the transaction was bigger than the adjusted basis of the property after taking depreciation into account. How can the corporation account for this gain? Would it have been any different if the property was sold by me as an individual instead of the corporation?

Answer each of these question, Describe the rules that apply to each property transaction and the possible tax consequences of each.

Reference no: EM13349330

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