Question 1

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 2

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 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 3

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

The estate tax calculation for Mr. McCann's estate will require more information such as the applicable estate tax rates and any available deductions. However, since the estate's taxable value ($21.9 million) exceeds the lifetime exclusion amount ($11.7 million in 2021), it is safe to assume that the estate will be subject to estate tax. Using the highest estate tax rate of 40%, the estate tax on Mr. McCann's estate would be $8.760 million. Therefore, option A is the closest estimate to the actual estate tax liability.

Question 4

Ms. Mollani owns stock in two S corporations, Aloha and Honu. This year, she had the following income and loss items:
  Compute Ms. Mollani's AGI under each of the following assumptions.

Accepted Answer

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

Question 5

Ms. Adair, a single individual, has $218,000 AGI, which includes $43,000 net investment income. Compute Ms. Adair's unearned income Medicare contribution tax.

Accepted Answer

The answer of Ms. Adair, a single individual, has $218,000...

Question 6

In 2015, 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 2015, Mr. Ames, an unmarried individual,...

Question 7

Mr. and Mrs. Bolt's joint return reports $267,500 AGI, which includes $13,300 net investment income. Compute the couple's unearned income Medicare contribution tax.

Accepted Answer

The unearned income Medicare contribution tax is calculated as 3.8% of the lesser of net investment income or the excess of AGI over the threshold amount for the couple's filing status ($250,000 for married filing jointly in 2020). In this case, the threshold excess is $17,500 ($267,500 AGI - $250,000 threshold), which is greater than the net investment income of $13,300. Therefore, the tax is calculated as 3.8% of $13,300, which is $505.

Question 8

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 9

In 2013, 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 2013 and $2,960 in 2014. Mr. Yang sold the bond for $169,500 in 2015. 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 2013, Mr. Yang paid $160,000 for...

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.

Ms. Mollani owns stock in two S corporations, Aloha and Honu. This year, she had the following income and loss items: Compute Ms. Mollani's AGI under each of the following assumptions.

Ms. Adair, a single individual, has $218,000 AGI, which includes $43,000 net investment income. Compute Ms. Adair's unearned income Medicare contribution tax.

Mr. and Mrs. Bolt's joint return reports $267,500 AGI, which includes $13,300 net investment income. Compute the couple's unearned income Medicare contribution tax.