On the exam would they provide the exact timing on when the walls are constructed? Here I assumed 1/2 year since it was purchased Jan 1. and would take time to construct the walls.
Why isn't the 25% rule being applied in the questions ? Meaning, why is it the entire gain is being recognized rather than a proportional recognition ?
The explanation is correct: any property used in trade or business is not considered capital assets. BUT the answer that the writer chooses is the opposite.
I thought the dividends of 12,000 (40,000 x 30%) should be subtracted from the net income distribution of 39,000 (130,000 x 30%) and then subtract the depreciation expense in order to get to the final number. Is there any reason why the dividend is not part of the calculation?