1)Valerie has an AGI of $75,000 without considering the sale of a nondepreciable

Question

1)Valerie has an AGI of $75,000 without considering the sale of a nondepreciable asset for

$15,000. The asset was acquired six years ago and has an adjusted basis of $28,000.

She has no other sales or exchanges.

Requirement

Determine her AGI for the following independent situations when the asset is:

a. A capital asset.

b. Sec. 1231 property.

2)

Consider the following summary of Sec. 1231 gains and losses recognized by Jasmine during the period

2010 -2015.

Jasmine had no nonrecaptured Sec. 1231 losses at the beginning of 2010.

DATA TABLE

Sec. 1231 Gains Sec. 1231 Losses

2010 $9,600   $6,500

2011 21,000   25,500

2012 18,000   26,300

2013 9,700   4,400

2014 25,700 13,900

2015   15,000   21,300

Requirement

If Jasmine has no capital gains and losses during the six-year period, determine her net capital gain for each year.

Determine the Sec. 1231 gain or loss for each year and enter the amount(s) in the appropriate type of income column. Note that you can enter more than one amount for each year. (If a box is not used in the table leave the box empty; do no enter a zero. Abbreviations used; NLTCG = net long-term capital gain, NLTCL = net long-term capital loss.)

Explanation / Answer

1) a AGI = $75000 - $3000

= $72000

Note:- Loss on sale of non depreciable asset = adjusted basis - sale amount

= $28000 - $15000

= $13000

But Capital loss are subjeted to limit of $3000 annually against income

b AGI = $75000 - $13000 = $62000

Note:- Under section 1231 real asset whether depreciable or not are considered, which are held for more than 1 year ,any loss of sale will be considered as ordinary loss which is 100% deductible

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