John and Susan are considering gifting stock to Ellen to make sure that she "stays on her feet" while trying to get her career established. They've decided to gift the Magellan Health Services fund. The original cost basis of the fund is $59,000. Assume that the fair market value of the fund on the date of the gift is $60,000. Ellen is very grateful, as she can certainly use the money. The fund does very well, and she decides to sell the fund six months later, and receives $72,000. What is the amount and nature (short- or long-term) of the gain or loss resulting from the sale?
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![John and Susan are considering gifting stock to Ellen to make sure that she "stays on her feet" while
trying to get her career established. They've decided to gift the Magellan Health Services fund. The
original cost basis of the fund is $59,000. Assume that the fair market value of the fund on the date
of the gift is $60,000. Ellen is very grateful, as she can certainly use the money. The fund does very
well, and she decides to sell the fund six months later, and receives $72,000. What is the amount
and nature (short- or long-term) of the gain or loss resulting from the sale?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0eb03798-68ea-49c2-9fab-df3324894e0a%2Fdde54e24-471f-4953-a922-2eb8630a5d9c%2Ffljp3xj_processed.jpeg&w=3840&q=75)
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- Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will administer it. As you’ve committed to fund a $10,000 scholarship every year beginning one year from tomorrow, you’ll want to set aside the money for the scholarship immediately. At tomorrow’s meeting with your grandfather and the bank’s representative, you will need to deposit$200,000 (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 6.00% per annum every year.Your grandfather wants to establish a scholarship in his father's name at a local university and has stipulated that you will administer it. As you've committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you'll want to set aside the money for the scholarship immediately. At tomorrow's meeting with your grandfather and the bank's representative, you will need to deposit (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 4.50% per annum every year. Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship's account. Your account should earn 7.00%. The amount of your required deposit should be revised to relationship between the interest rate earned on the account and the present value of the perpetuity. This suggests there isRose is planning to adopt a charity foundation once she receives her money. She promised to donate annually to her chosen Charity Foundation to support the needs of the foster kids. The foundation will receive $l0,000 for the first six years, $12,000 for the next five years and $15,000 for each year thereafter. The donation will start one year after she receives her money allotment. If the fund earns 7.0% interest, what is the amount of the donation? Please include cashflow diagram and full formulas.
- Michiko and Saul are planning to attend the same university next year. The university estimates tuition, books, fees, and living costs to be 12,000 per year. Michikos father has agreed to give her the 12,000 she needs to attend the university. Saul has obtained a job at the university that will pay him 14,000 per year. After discussing their respective arrangements, Michiko figures that Saul will be better off than she will. What, if anything, is wrong with Michikos thinking?Jeremiah Wood wants to set up a fund to pay for his daughter's education. In order to pay her expenses, he will need $22,000 in four years, $23,400 in five years, $24,600 in six years, and $26,100 in seven years. If he can put money into a fund that pays 5 percent interest, what lump-sum payment must Jeremiah place in the fund today to meet his college funding goals? Round the answer to the nearest cent. Round PV-factor to three decimal places.Henry O’Donnell created an Inter Vivos trust fund. He owns a large department store in Higgins, Utah. He also owns a tract of land adjacent to the store used as an extra parking lot when the store is having a sale and during the Christmas season. O’Donnell expects the land to appreciate in value and eventually be sold for an office complex or additional stores. O’Donnell places this land into a charitable lead trust, which will hold the land for 10 years until O’Donnell’s son is 21. At that time, title will transfer to the son. The store will pay rent to use the land during the interim. The income generated each year from this usage will be given to a local church. The land is currently valued at $320,000. During the first year of this arrangement, the trustee records the following cash transactions: Prepare all journal entries for this trust fund including the entry to create the trust.
- Henry O’Donnell created an inter vivos trust fund. He owns a large department store in Higgins, Utah. He also owns a tract of land adjacent to the store used as an extra parking lot when the store is having a sale and during the Christmas season. O’Donnell expects the land to appreciate in value and eventually be sold for an office complex or additional stores.O’Donnell places this land into a charitable lead trust, which will hold the land for 10 years until O’Donnell’s son is 21. At that time, title will transfer to the son. The store will pay rent to use the land during the interim. The income generated each year from this usage will be given to a local church. The land is currently valued at $320,000.During the first year of this arrangement, the trustee records the following cash transactions: Cash inflows:Rental income . . . . . . . . . . . . . $60,000Cash outflows:Insurance . . . .. . . . . . . . . . . . . . $ 4,000Property taxes . . . . . . . . . . . . . . . . 6,000Paving…Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will administer it. As you’ve committed to fund a $25,000 scholarship every year beginning one year from tomorrow, you’ll want to set aside the money for the scholarship immediately. At tomorrow’s meeting with your grandfather and the bank’s representative, How much will need to deposit? rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 5.50% per annum every year. The bank representative just reported that he misquoted the available interest rate on the scholarship’s account. Your account should earn 3.50%. The amount of your required deposit should be revised to?Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will administer it. As you’ve committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you’ll want to set aside the money for the scholarship immediately. At tomorrow’s meeting with your grandfather and the bank’s representative, you will need to deposit ___________ (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 4.50% per annum every year. Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship’s account. Your account should earn 7.00%. The amount of your required deposit should be revised to____________. This suggests there is (an inverse / a direct) relationship between the interest rate earned on the account and the present value of the perpetuity.
- 30 After reviewing her financial affairs, Jasmine has determined that she would like the $75,000 death benefit from one of her insurance policies to go to a local registered charity. The whole life policy in question has a $45,000 cash surrender value (CSV) and she pays an annual premium of $500. Jasmine's current cash flow situation is quite good. She is living a comfortable retirement. However, she is worried as she has assets, that of the taxes that will be payable after her death will result in considerable capital gains. She is unable to purchase a new life insurance to cover the income tax triggered at death because of her health. What should Jasmine do to fulfill her desire to donate $75,000 to the registered charity and alleviate the taxes payable following her death? NVBDQncreUJQWW1 Ya0w4cWZjYVhIQT09 → a. O Surrender the life insurance policy and donate the CSV. b. O Name the registered charity as beneficiary of the life insurance policy. c. O Assign the life insurance policy…After reading an estate planning article, Vaughn has decided to take action to reduce his gross estate by making annual gifts to his four children, eight grandchildren, and four great-grandchildren. Vaughn has discussed the gifting strategy with his wife, Rebecca and she has agreed to split each gift. If Vaughn gifts the maximum amount each year without incurring gift taxes, how much can he gift this year? Must a gift tax return be filed? Celeste and Raymond have bene married for 29 years. Last year, Raymond sold his business and his net worth now exceeds $30 million. Celeste and Raymond have twin daughter, Kelly and Shelly. Celeste and Raymond, neither of whom have given any gifts in the past, would like to give their daughters the maximum amount of cash possible without incurring any gift tax liability. How much can Celeste and Raymond give to Kelly and Shelly this year?Henry wants to establish a trust for his financially challenged adult daughter. He wants to contribute annually to the trust, but his daughter would receive only the trust income. The remainder would go to his grandchildren (her children) at her death. Henry wants the daughter to receive all the earnings from the trust with no restrictions. He realizes that she will probably just squander the money she receives but wants to otherwise protect her from her creditors. Which of the following trusts would you recommend Henry establish for the benefit of his daughter? A) An irrevocable trust, including spendthrift provisions B) A Section 2503(b) trust C) A Section 2503(c) trust D) A support trust