Income Tax Preparation

Part 1:
Answer the below questions. You must show your calculations and explain your answer.

  1. John purchases a delivery van at an online auction for his new business. Prior to using the van the following cost were incurred. The cost of the van is $35,000. Shipping costs are $400. The van to was painted to make a uniform fleet of vans in which the cost was $1,000. Sales tax on the van is $2,500. Shipping insurance was $200. The van was washed for and additional $25. A tuneup which costs $200. What is the tax basis of the delivery van?
  2. Mary purchased a building to store inventory for her business. The purchase price is $750,000 and she paid $3,000 to repair the roof, $6,000 to make the interior ready for finished goods, and $500 in legal fees. What is the tax basis of the building to store inventory?
  3. ABC Company bought equipment for its manufacturing plant. The equipment costs $40,000. The equipment shipping costs $2,000, the setup fee is $1,000, and testing the testing fee is $300. Upon testing, ABC discovers damage to the equipment from shipping. The damage is $2,000 paid by ABC. What is the tax basis of the equipment?

Part 2:
Given the following information for Amber Smith, complete Schedule D and form 8949 for 2018.
1.Stock options, which she purchases on February 14 of the current year for $850, expire on October 1.
2.On July 1, she sells for $4,500 her personal-use automobile acquired on March 31, 2010, for $18,000.
3.On August 16, she sells for $3,100 her stock of York Corporation purchased as an investment on February 16, for $1,600
4.On March 15, she sells for $5,600 an antique ring, a gift from her grandmother on January 10, 2004, when its FMV was $1,600. The ring was purchased by her grandmother on April 2, 1979, for $1,800.
5.She has an STCL carryover of $250 from last year.

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