Please explain proper steps by Step and Do Not Give Solution In Image Format And Fast Answering Please Thanks In Advance ? Compute Mr. Woods's taxable income after taking into account the transactions described above.Descriptiona. Landb. Iron Byronc1. Sofac2. Chairc3. Marketable securitiesc4. Land - for investmentc5. Investment propertyd1. Buildingd2. Land§1231 nettingStep1 - depreciation recapture- ordinary incomeStep 2 - $1231 Gain or Lossnetting- gains or losses exclusive of$1250- Unrecapture § 1250Step 3 - lookback rule- apply to unrecapture 250 firstOrdinary incomeRemaining unrecapture §1250Remaining gain - 0/15/20Capital gain netting:Long term capital loss carryoverReclassifiedTaxable Income:Before transactionsOrdinary income/lossLTCG @ 25%LTCG @ 0/15/20%Taxable incomeGain or(Loss)$(66,000)27,000440(1,200) ✔7,6002,000(4,000)155,00025,000145,8400xAnswer is complete but not entirely correct.60,0000 x0DepreciationRecapture0x0x0018,0004400✔0oooo3300♥0✔018,44018,440XAnswer is complete but not entirely correct.Ordinaryincome or(Loss)ShortTerm(66,000)$12310✔9,0000✔(1,200) ✔00✔0✔155,000✔25,000187,8000X0X0x187,80000♥0✔000♥0✔0(66,000)18,440333330X(47,560)000♥0✔000✔0✔0✔00SLong TermTotalO✔ S00✔0✔7.600✔2,000✔(4,000) ✔005,6000x05,6000 xLong term28%5,6000✔0✔0♥0♥0✔0✔0♥0✔0000XXX0x0Longterm25%0✔0OO00✔0✔0✔0♥OOO0000x00x0Longterm0/15/20%0✔00✔0✔7,6002,000 ✓(4,000) ✔005,60005,6005,600 Required Information[The following information applies to the questions displayed below.]WAR (We Are Rich) has been in business since 1989. WAR is an accrual-method sole proprietorship that deals in themanufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAS has filed accurate tax returns forWAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well withthe owner of WAR-Mr. Someday Woods (single). However, in early 2022, Jack Hack and Someday Woods played a roundof golf, and Jack, for the first time ever, beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hiredyou to compute his 2022 taxable income. Mr. Woods was able to provide you with the following information from prior taxreturns. The taxable income numbers reflect the results from all of Mr. Woods's activities except for the Items separatelystated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2017-2021 numbers do not reflect capital loss carryovers.Ordinary taxable incomeOther items not included inordinary taxable income:Net gain (loss) on disposition of§1231 assets2017$ 4,400$ 3,600Net long-term capital gain (loss)on disposition of capital assets $ (16,500) $ 1,200 $ (20,500)2018$ 2,200AssetSomeday's black leathersofa (used in office)Someday's office chairMarketable securitiesLand held for investmentOther investmentproperty11,000Placed inService (orpurchased)4/4/213/1/202/1/197/1/21$ (9,000)In 2022, Mr. Woods had taxable income in the amount of $520,000 before considering the following events andtransactions that transpired in 2022:2019$ 98,700a. On January 1, 2022, WAR purchased a plot of land for $110,000 with the intention of creating a driving range wherepatrons could test their new golf equipment. WAR never got around to building the driving range; Instead, WAR sold theland on October 1, 2022, for $44,000.b. On August 17, 2022, WAR sold Its golf testing machine, "Iron Byron," and replaced it with a new machine, "Iron Tiger.""Iron Byron" was purchased and installed for a total cost of $26,000 on February 5, 2018. At the time of sale, "IronByron" had an adjusted tax basis of $8,000. WAR sold "Iron Byron" for $35,000.Soldc. In the months October through December 2022, WAR sold various assets to come up with the funds necessary toInvest in WAR's latest and greatest invention-the three-dimple golf ball. Data on these assets are provided below:10/16/2211/8/2212/1/2211/29/222020$ 178,50010/15/22$ (7,200)InitialBasis$ 3,8009,60014,40055,0002021$ 262,500AccumulatedDepreciation$ 7403,4008SellingPrice$ 3,5005,00022,00057,00011/30/2020,000d. Finally, on May 7, 2022, WAR decided to sell the building where it tested Its plutonium shaft, lignite head drivers. WARpurchased the building on January 5, 2010, for $240,000 ($210,000 for the building, $30,000 for the land). At the timeof the sale, the accumulated depreciation on the building was $60,000. WAR sold the building (with the land) for$360,000. The fair market value of the land at the time of sale was $55,000.Note: Do not round Intermediate computations. Round your final answers to the nearest whole dollar amount. Lossamounts should be Indicated by a minus sign.16,000

Question

Please explain proper steps by Step and Do Not Give Solution In Image Format And Fast Answering Please Thanks In Advance ? Compute Mr. Woods's taxable income after taking into account the transactions described above.Descriptiona. Landb. Iron Byronc1. Sofac2. Chairc3. Marketable securitiesc4. Land - for investmentc5. Investment propertyd1. Buildingd2. Land§1231 nettingStep1 - depreciation recapture- ordinary incomeStep 2 - $1231 Gain or Lossnetting- gains or losses exclusive of$1250- Unrecapture § 1250Step 3 - lookback rule- apply to unrecapture 250 firstOrdinary incomeRemaining unrecapture §1250Remaining gain - 0/15/20Capital gain netting:Long term capital loss carryoverReclassifiedTaxable Income:Before transactionsOrdinary income/lossLTCG @ 25%LTCG @ 0/15/20%Taxable incomeGain or(Loss)$(66,000)27,000440(1,200) ✔7,6002,000(4,000)155,00025,000145,8400xAnswer is complete but not entirely correct.60,0000 x0DepreciationRecapture0x0x0018,0004400✔0oooo3300♥0✔018,44018,440XAnswer is complete but not entirely correct.Ordinaryincome or(Loss)ShortTerm(66,000)$12310✔9,0000✔(1,200) ✔00✔0✔155,000✔25,000187,8000X0X0x187,80000♥0✔000♥0✔0(66,000)18,440333330X(47,560)000♥0✔000✔0✔0✔00SLong TermTotalO✔ S00✔0✔7.600✔2,000✔(4,000) ✔005,6000x05,6000 xLong term28%5,6000✔0✔0♥0♥0✔0✔0♥0✔>>0000XXX0x0Longterm25%0✔0OO00✔0✔0✔0♥OOO0000x00x0Longterm0/15/20%0✔00✔0✔7,6002,000 ✓(4,000) ✔005,60005,6005,600 Required Information[The following information applies to the questions displayed below.]WAR (We Are Rich) has been in business since 1989. WAR is an accrual-method sole proprietorship that deals in themanufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAS has filed accurate tax returns forWAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well withthe owner of WAR-Mr. Someday Woods (single). However, in early 2022, Jack Hack and Someday Woods played a roundof golf, and Jack, for the first time ever, beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hiredyou to compute his 2022 taxable income. Mr. Woods was able to provide you with the following information from prior taxreturns. The taxable income numbers reflect the results from all of Mr. Woods's activities except for the Items separatelystated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2017-2021 numbers do not reflect capital loss carryovers.Ordinary taxable incomeOther items not included inordinary taxable income:Net gain (loss) on disposition of§1231 assets2017$ 4,400$ 3,600Net long-term capital gain (loss)on disposition of capital assets $ (16,500) $ 1,200 $ (20,500)2018$ 2,200AssetSomeday's black leathersofa (used in office)Someday's office chairMarketable securitiesLand held for investmentOther investmentproperty11,000Placed inService (orpurchased)4/4/213/1/202/1/197/1/21$ (9,000)In 2022, Mr. Woods had taxable income in the amount of $520,000 before considering the following events andtransactions that transpired in 2022:2019$ 98,700a. On January 1, 2022, WAR purchased a plot of land for $110,000 with the intention of creating a driving range wherepatrons could test their new golf equipment. WAR never got around to building the driving range; Instead, WAR sold theland on October 1, 2022, for $44,000.b. On August 17, 2022, WAR sold Its golf testing machine, &#34;Iron Byron,&#34; and replaced it with a new machine, &#34;Iron Tiger.&#34;&#34;Iron Byron&#34; was purchased and installed for a total cost of $26,000 on February 5, 2018. At the time of sale, &#34;IronByron&#34; had an adjusted tax basis of $8,000. WAR sold &#34;Iron Byron&#34; for $35,000.Soldc. In the months October through December 2022, WAR sold various assets to come up with the funds necessary toInvest in WAR's latest and greatest invention-the three-dimple golf ball. Data on these assets are provided below:10/16/2211/8/2212/1/2211/29/222020$ 178,50010/15/22$ (7,200)InitialBasis$ 3,8009,60014,40055,0002021$ 262,500AccumulatedDepreciation$ 7403,4008SellingPrice$ 3,5005,00022,00057,00011/30/2020,000d. Finally, on May 7, 2022, WAR decided to sell the building where it tested Its plutonium shaft, lignite head drivers. WARpurchased the building on January 5, 2010, for $240,000 ($210,000 for the building, $30,000 for the land). At the timeof the sale, the accumulated depreciation on the building was $60,000. WAR sold the building (with the land) for$360,000. The fair market value of the land at the time of sale was $55,000.Note: Do not round Intermediate computations. Round your final answers to the nearest whole dollar amount. Lossamounts should be Indicated by a minus sign.16,000

Accepted Answer

Depreciation recapture:
Depreciation recapture refers to the portion of the gain on the sale of an…