1.) The client inherited stocks from their grandfather when he passed away. Their grandfather bought half of them a month ago for $100,000 and they are now worth $150,000. The other half was purchased two years ago for $250,000 and they are now worth $500,000. The client wants to sell them tomorrow - what will the tax consequences be?

1.) The client inherited stocks from their grandfather when he passed away. Their grandfather bought half of them a month ago for $100,000 and they are now worth $150,000. The other half was purchased two years ago for $250,000 and they are now worth $500,000. The client wants to sell them tomorrow - what will the tax consequences be?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 3RP

See similar textbooks

Similar questions

Assume Chad takes a distribution of the CRP stock several years from now when the stock is valued at $500,000. A few years later, Chad has a terrible accident and dies. The value of the CRP stock at the time of his death is $700,000. Patricia inherits the stock and sells it six months after Chad dies for $800,000. What are the tax implications of the sale?
Suppose your friend is being considered for a promotion at work. The promotion is expected to provide your friend an extra 10,000 dollars per year in salary. However, your friend does not want the promotion, because he just looked at his tax return and saw that if he were to earn just 5000 more per year in taxable income, it will push him into a higher tax backet. What should you tell you friend? 1) You are an idiot. Never turn down money, because tax brackets are applied 2) You should arrange for the promotion to only increase the salary by 5000 3) The decision is a logical application of NPV concepts 4) None of these are correct
2 Many years ago, Douglas invested in an apartment building that he wants to bequeath to his children David and Jeanne when he dies. He has just found out that there will then be a large tax liability on the capital gain, which could force his children to sell the building. The fair market value (FMV) of the building is $900,000 and its adjusted cost base (ACB) is $270,000. Douglas's marginal tax rate is 50%. He is thinking of buying life insurance for his children to cover the capital gains tax. How much would the tax liability be if Douglas were to die in the near future? O $157,500 O $225,000 O $315,000 O $450,000 ose 1 option. Il Examity Proctoring is sharing your screen. Stop sharing Hide
3) Sally purchased 100 shares of Intel in her IRA on January 4, 2018 for $95 per share. She subsequently sold those shares on June 1, 2020 for $203 per share. What was the amount of her capital gain and how much tax would she pay on this transaction? 9) Sally bought 300 shares of CSCO for $35.60 in her brokerage account on March 16, 2020, and sold half of her position on August 24, 2020, for $42.20. What's her capital gain and at what tax rate will she pay on those gains? 17) Assume Josephine purchases a home for $180,000 and has a 20% down payment. If she finances the purchase with a 30 year mortgage with a 4% interest rate....... what is her monthly payment? If she pays the mortgage through the entire term with no early payment, how much interest will she pay over the life of the loan? 19) Assume Earl purchased 1000 shares of Tesla in his brokerage account on June 1, 2017 for $33.74 per share and sold his entire position for $62.93 per share on May 2, 2020. Assuming he is filing his…
Jeff is trying to decide whether to sell his baseball card collection. He has been offered a price that would give him a profit of $2,500by a dealer who has agreed to pay Jeff this price now or in January of next year. This year Jeff is in the 28 percent marginal tax bracket, but next year Jeff expects to be in the 15 percent marginal tax bracket. Therefore, the estimated income tax liability on this $2,500income would be this year and next year.$700;$520$520;$520$375;$700$700;$375
Aaron and Melissa are looking to sell their house for $700,000. They purchased the house seven years ago for $480,000 and didn't have any adjustments to factor in. If Aaron and Melissa sell their house for $700,000, how much will they have to pay in capital gains? O $700,000. Married couples are required to pay capital gains on the final sales price. O $220,000. All sellers have to pay capital gains on the sales price minus the price they originally paid. O $0. The $500,000 capital gains exclusion will allow them to write off any profits earned on the property. $0. Capital gains is only paid on commercial properties.
Suppose that Ike is loss averse. In the morning, Ike’s stockbroker calls to tell him that he has gained $1,000 on his stock portfolio. In the evening, his accountant calls to tell him that he owes an extra $1,000 in taxes. At the end of the day, does Ike feel emotionally neutral since the dollar value of the gain in his stock portfolio exactly offsets the amount of extra taxes he has to pay? Explain.
ack purchases a house for $90,000 and spends $15,000 to renovate it. He holds the house for 35 years and then sells it in the middle of a real estate bubble for $400,000. How much of that amount does he have to pay taxes?
A tax payer is treating real property used solely for business purposes for new real property to be used in his business. The real property originally cost $35,000 and he has taken $18,000 dollars in depreciation. The old real property is currently worth $20,000 dollars and the new real property the taxpayer wants in exchange is only worth $16,500.The other party agrees to get the taxpayer $3500 in addition to the new real property. What is the gain or loss recognized by the taxpayer on this transaction?
Ms. Jones owns all of the shares of Jones Co. She has had the company valued and 50% of the shares are worth $100,000. She is going to sell to her husband 50% of her shares for $100,000 cash. She intends to report the gain on her tax return and have her husband pay tax on any dividends paid by the company. Does this work? Comment.
Mark's father, Michael, loaned Mark $300,000 interest free for five years to invest in securities that yield a 10 percent annual return. At the end of the five years, Mark sells the securities to repay his father. Unfortunately, the market declined and Mark was able to sell the securities for only $280,000. Michael accepted the $280,000 as payment in full on the loan. How do you think this transaction will be treated for tax purposes?
1 Suppose the taxpayer originally purchased the machinery by paying $12,000 in cash and giving the seller a note for $12,000. When she sold it she received $38,000 in cash and the buyer assumed the $12.000 note. a. What is the amount realized? b. What is the adijusted basis of the machinery? c. What is the gain on the sale of the machinery?