Nicole Has the Following Transactions Related to Her Investments and Her

question 47

Essay

Nicole has the following transactions related to her investments and her sole proprietorship during 2013:
(1)Stock that was purchased in 2008 is sold at a loss of $12,000.
(2)Bonds that were purchased in 2013 are sold at a gain of $6,000.
(3)A building used in her business is sold at a gain of $17,000.The building was purchased in 1996 and $24,000 of depreciation had been taken on the building.
(4)Equipment purchased in 2008 is sold at a loss of $16,000.Depreciation of $25,000 had been taken prior to the sale.
(5)A delivery van is destroyed in an accident.Nicole realizes a gain of $5,000 on the van.She had deducted $3,000 of depreciation on the van prior to the accident.She does not intend to replace the van.
a.Determine the character of each gain or loss:

b.Determine the effect of the gains and losses on Nicole's current-year adjusted gross income.

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Definitions:

Periosteum

A dense layer of vascular connective tissue enveloping the bones except at the surfaces of the joints.

Diaphysis

The shaft or central part of a long bone, which is composed mainly of compact bone and contains the medullary cavity.

Epiphyses

The ends of long bones, where growth in length occurs during childhood and adolescence.

Long Bones

Bones that are longer than they are wide and serve as levers for movement, such as the femur.