Question 1

Ms. Mollani owns stock in two S corporations, Aloha and Honu. This year, she had the following income and loss items:
 $$\begin{array} { | l | c | } 
\hline \text { Salary } & \$ 45,000 \
\hline \text { Business income from Aloha } & \$ 12,000 \
\hline \text { Business loss fron Horu } & \$ ( 17,000 ) \
\hline
\end{array}$$

Accepted Answer

The answer of Ms. Mollani owns stock in two S...

Question 2

Mrs. Heyer inherited real estate from her mother. The mother's basis in the real estate was $382,000, and the fair market value at the date of the mother's death was $900,000. The mother's taxable estate was only $2.4 million, so the estate did not owe any federal estate tax. This year, Mrs. Heyer sold the real estate for $875,000. Compute her gain or loss recognized on sale.

Accepted Answer

Mrs. Heyer's basis in the real estate is the fair market value at the date of her mother's death, which is $900,000. Since she sold the property for $875,000, she recognized a loss of $25,000. However, since the loss is a personal loss and not a business or investment loss, she cannot deduct it on her tax return. Therefore, her recognized gain or loss on the sale is $0.

Question 3

Mr. Carp, a single taxpayer, recognized a $44,000 long-term capital gain, a $12,000 short-term capital gain, and a $10,000 long-term capital loss. Compute Mr. Carp's 2016 income and Medicare contribution tax if his taxable income before consideration of his capital transactions is $465,000, none of which is investment income

Accepted Answer

The answer of Mr. Carp, a single taxpayer, recognized a...

Question 4

Mr. McCann died this year. During his lifetime, he made taxable gifts significantly in excess of his lifetime exclusion. Mr. McCann's taxable estate was $21.9 million. Compute the estate tax on this estate.

Accepted Answer

$21.9 taxable estate × 40%.

Question 5

Mr. Lainson died this year on a date when the total FMV of his property was $12 million and his debts totaled $450,000. His executor paid $15,000 of funeral expenses and $50,000 of accounting and legal fees to settle the estate. Mr. Lainson bequeathed $1 million to Villanova University, $200,000 to the Lutheran church, and $3.5 million to his surviving spouse. He left the remainder of the estate to his children. Compute Mr. Lainson's taxable estate.

Accepted Answer

The answer of Mr. Lainson died this year on a...

Question 6

In 2015, Mr. Yang paid $160,000 for a corporate bond with a $200,000 stated redemption value. Based on the bond's yield to maturity, amortization of the $40,000 discount was $3,024 in 2015 and $2,960 in 2016. Mr. Yang sold the bond for $169,500 in December 2016. What are his tax consequences in each year assuming that:
a. He bought the newly issued bond from the corporation?
b. He bought the bond in the public market through his broker?

Accepted Answer

The answer of In 2015, Mr. Yang paid $160,000 for...

Question 7

Beverly earned a $75,000 salary and recognized a $7,200 loss on the sale of corporate stock this year. Compute her AGI in each of the following independent cases.
a. Beverly had no other capital transactions this year.
b. Beverly recognized a $13,500 capital gain on the sale of mutual fund shares.
c. Beverly received a $9,500 capital gain distribution from a mutual fund and had a $3,200 capital loss carryforward from a previous year.

Accepted Answer

The answer of Beverly earned a $75,000 salary and recognized...

Question 8

In 2016, Mr. Ames, an unmarried individual, made a gift of real estate to his nephew. Compute the amount subject to the federal gift tax in each of the following situations.
a. FMV of the real estate was $1,800,000, and the transfer was Mr. Ames' first taxable gift.
b. FMV of the real estate was $7,250,000 and the transfer was Mr. Ames' first taxable gift.
c. FMV of the real estate was $2,300,000. Two years ago, Mr. Ames made his first taxable gift of marketable securities with a $3,920,000 FMV in excess of the annual exclusion.

Accepted Answer

The answer of In 2016, Mr. Ames, an unmarried individual,...

Quiz 16: Investment and Personal Financial Planning

Mr. McCann died this year. During his lifetime, he made taxable gifts significantly in excess of his lifetime exclusion. Mr. McCann's taxable estate was $21.9 million. Compute the estate tax on this estate.