Marco Polo is in the business of racing boats. For 2016 it has $5,000,000 of taxable income before the following transactions. It has nonrecaptured Sec. 1231 losses of $10,000 from 2012 and $13,000 from 2010.
A. A building with an adjusted basis of $300,000 is totally destroyed by fire. It receives insurance proceeds of $400,000 but does not plan to replace the building. It was built 12 years ago at a cost of $420,000.
B.It sold a boat storage area (undeveloped) for $50,000. It purchased the property 12 years ago for $15,000.
C.It sold a race boat for $250,000 that was purchased three years ago for $200,000. $160,000 of depreciation was taken.
D.It exchanged equipment purchased three years ago for IBM stock worth $100,000. The adjusted basis is $220,000. If straight-line depreciation was taken the adjusted basis would be $252,000.
E.On December 1 it sold Disney stock for $50,000. It purchased the stock for $112,500 on December 5, 2015.
I. What is Marco’s 2016 capital gain or loss from these transactions?
II. What is Marco’s 2016 ordinary income or loss from these transactions?