In 2005, Mr. Earl, a single taxpayer, contributed $45,000 in exchange DB stock. In 2008, he paid $40,000 to another shareholder to purchase 1,000 more DB shares. All DB's stock qualified as Section 1244 stock when it was issued. This year, Mr. Earl sold all 1,500 DB shares for $16 per share. His only income item was his $80,000 salary. Assume the taxable year is 2021. Required: a. Compute Mr. Earl's AGI. b. What is Mr. Earl's AGI if he also recognized a $20,000 capital gain on the sale of other securities?
In 2005, Mr. Earl, a single taxpayer, contributed $45,000 in exchange DB stock. In 2008, he paid $40,000 to another shareholder to purchase 1,000 more DB shares. All DB's stock qualified as Section 1244 stock when it was issued. This year, Mr. Earl sold all 1,500 DB shares for $16 per share. His only income item was his $80,000 salary. Assume the taxable year is 2021. Required: a. Compute Mr. Earl's AGI. b. What is Mr. Earl's AGI if he also recognized a $20,000 capital gain on the sale of other securities?
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 57P
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Transcribed Image Text:In 2005, Mr. Earl, a single taxpayer, contributed $45,000 in exchange for 500 shares of
DB stock. In 2008, he paid $40,000 to another shareholder to purchase 1,000 more DB
shares. All DB's stock qualified as Section 1244 stock when it was issued. This year, Mr.
Earl sold all 1,500 DB shares for $16 per share. His only income item was his $80,000
salary. Assume the taxable year is 2021.
Required:
a. Compute Mr. Earl's AGI.
b. What is Mr. Earl's AGI if he also recognized a $20,000 capital gain on the sale of other
securities?
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