Finding the Amount Realized and Making a Journal Entry

Please study the content of module 1 and complete the questions in the document.
If you have any questions, please few free to ask.

(1)   In order to acquire Property #1, Holly transfers $50,000 of cash to George.  In addition, Holly takes Property #1 subject to an existing $63,000 mortgage, gives George her own promissory note in the amount of $75,000 and a Corvette with a FMV of $47,000 and an adjusted basis in Holly’s hands of $40,000.

(a)    What is George’s amount realized on the sale of Property #1 to Holly?

(b)    If George had originally purchased Property #1 for $100,000, what is the amount of gain that he should recognize

(c)    What is Holly’s basis in Property #1?

(2)   Abbey receives cash and a $100,000 note from Brown in exchange for Land having a FMV equal to 325,000.  What’s is Abbey’s amount realized?

(3)    Adams acquired Blackacre for $50,000 cash plus a purchase money mortgage of $200,000.   Over the next couple of years Adams claimed $100,000 of depreciation (cost recovery deduction) on Blackacre.  In addition over the same period of time he paid off $80,000 of the purchase money mortgage.  At a time when Blackacre had a FMV of $400,000, Adams sold Blackacre to Sally, who assumed the existing debt, gave Adams her personal note in the amount of $100,000 and a check for the balance. 

(a)    Make the journal entry to record Adams’ purchase of Blackacre.

(b)   Make the journal entry to record the depreciation (cost recovery deduction) taken by Adams on Blackacre (make a single JE, in other words don’t worry about how many years the deduction was claimed).

(c)    Make the journal entry to record the partial payment of the original debt incurred at the time of the purchase of Blackacre.

(d)   Make the journal entry to record Adams’ sale of Blackacre to Sally.