Reference no: EM132585463

Question 1. Pereira LLC owns equipment with a $250,000 adjusted basis which was purchased on 3/14/2016 for $435,000. Determine the amount and character of Pereira LLC's gain or loss if the equipment was sold on 4/1/2018 with proceeds of: (a) $375,000, (b) $525,000, (c) $220,000.

Question 2. Maple LLC purchased manufacturing equipment on 5/19/2016 for $600,000. Maple has taken depreciation of $330,000 on the equipment and it has an adjusted basis of $270,000 when it is sold on 2/15/2018 for $450,000.

(a). What is the amount and character of Maple LLCs gain/loss on the sale of the manufacturing equipment.

(b). Assume Maple LLC also has a net nonrecaptured 1231 Loss of $50,000. How does this affect your answer to (a) above?

Question 3. Core LLC has an manufacturing warehouse that was purchased in 1983 for $125,000. Core LLC claimed accelerated depreciation on the warehouse of $120,000 and straight-line depreciation would have been $113,000. In 2018 Core LLC sells the warehouse for $535,000. Calculate the gain on the sale of the warehouse including a breakdown of the character and taxation of the gain.