Special Property Tax Transactions: Class Questions - Review 4 скачать в хорошем качестве

Special Property Tax Transactions: Class Questions - Review 4

In this video, 7.07 – Special Property Tax Transactions – Review 4, Roger Philipp, CPA, CGMA, concludes the review of special property tax transactions, tackling a question on reporting taxable gain on sale using the installment method (which would be reported on IRS Form 6252, Installment Sale Income): A taxpayer sold a building acquired for $500,000 with $80,000 in accumulated depreciation. The sales price is $600,000, with $120,000 received in the first year as a down payment and $120,000 scheduled to be received in each of the following four years. How much of the first year’s payment should be reported as installment sales income on Form 6252? Roger solves the problem step by step so we get a thorough understanding of each component. First, determine the realized gain from the sale. Next, calculate the gross profit percentage by dividing the realized gain by the sales price. Lastly, multiply the year’s payment by the gross profit percentage to determine the amount of taxable income in that year to be reported on Form 6252. Roger ends the review by reiterating that there are a lot of important special tax rules for particular property tax transactions, so it is best to have a solid understanding of the basic rules for each special property tax transaction. Connect with us: Website: https://accounting.uworld.com/cpa-rev... Blog: https://accounting.uworld.com/blog/cp... Twitter:   / uworldrogercpa   Facebook:   / uworldrogercpareview   Instagram:   / uworldrogercpareview   Pinterest:   / uworldrogercpareview   LinkedIn:   / uworld-roger-cpa-review   Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://accounting.uworld.com/cpa-rev... Full Transcript: Last question 14, “what amount of gain should Avery report in the year of sale using the installment method?” Alright, “Avery Corp sold a building for 600 grand. Avery received a down payment of 120, as well as annual principle payments of 120 for each of the subsequent four years. Avery purchased the building for 500 and claimed depreciation of 80,000 dollars. What amount of gain should Avery report in the year of sale using the installment method?” So we're looking at installment sales approach. What we have to figure out is how much we're going to get and how much our gain is. So, in looking at this, here's what's going on. We sold a building for 600, great 600. We received a down payment of 120 as well as installment payments of 120 for the next four years. So 120 for the four years is 480, 480 plus 120, 480, 580, 600. Avery purchased the building for 500 and claimed depreciation of 80. So we purchased it for 500, accumulated depreciation is 80 our book value is 420. Therefore, we're going to make 180. So 180 is going to be the gain on the sale but normally you recognize that you’re done. But because we're going to get the payments of 120, 120, 120, 120, we just got 120 this year, we're going to get another four payments of 120. Four at 120 is 480 plus the 120. That's how we're getting the 600. So we're going to get a 120 this year, how much of that is profit? What do we do? You take the gain over the sales price 600. That equals what? About six time three is 18, 30 percent. Therefore, 30 percent of the 120 which is 36 is how much we should recognize. That again, if you had to do a 62/52, remember the line items are like, what's your profit? What's your sales price? What's the percentage? How much cash did you get? How much did you recognize? That's basically what you do. That's how we look at it for property. So again, property is an important area. There's a lot of stuff in there but it's a little bit about a lot of information. Study it, live it, love it, learn it. We'll see you soon.