Case Brief Essay Example | Topics and Well Written Essays - 500 words - 2

Case Brief - Essay Example She was also expected to reserve $ 200.00 every month for taxes and pay-- collecting the rents, paying for the net rentals towards the mortgage debt. However, On November 29, 1938, the mortgagee threatened foreclosure of the property after the reorganization of the interest grew to $ 15,857.71. Mrs. Crane, therefore, decided to sell it to a third party for $ 3,000.00 cash and paid $ 500.00 expenses of sale. She reported a taxable increment of $ 1,250.00. She argued that her property acquired from 1932-1938 was only the equity. She claimed that the equity was of zero worth when she acquired it. No depreciation could be taken on a zero value. Secondly, neither she nor her vendee ever assumed the debt; therefore, upon selling the equity, the amount she realized on the sale was $ 2,500.00. Nonetheless, he Commissioner determined that petitioner realized a net taxable gain of $ 23,767.03. He argued that, in addition to the net cash accounted by the petitioner, the amount realized should a lso contain the standard amount of the mortgage of $250,000 when sold. Issues: First, how the gain or loss on the sale of a physical property acquired by bequest subject is determined. Secondly, how the amount realized on the sale of a physical property is calculated and lastly, whether there are any depreciation allowances from the value of a property at the time of gaining. Analysis: The tax court first established the selling price comprised of the land and the building although the building is not a â€Å"capital asset†. The whole gain should, therefore, be taxed after the adjustments of the property were and tear has been made, under  §113 (a). The first question, the court determined that, under section  § 113 (a) (5), unadjusted basis for determining loss or gain on sale of a physical property. Mrs. Crane should determine her property value undiminished by the amount of the mortgage. In the second question, under  § 111 (b), the "amount realized" is calculated as the