Q.4 George purchased stock in 2016 for $20,000. He gave the stock to his son, William, in 2017. On the date of the gift the FMV of the stock was $14,500 and no gift tax was paid on the transfer. William later sold the stock for $12,700. What is William’s recognize gain or loss on the sell of the stock: Q.5 For the current year, David has salary income of $125,000 and the following property transactions: Stock investment sales Long-term capital gain $ 9,000 Short-term capital loss (19,500) Gain on sale of camper (purchased 4 years ago and used for family vacations) 8,000 What is David’s AGI for the current year? Q.6 On November 15, 2018, Bob, a cash basis taxpayer, gave his son Dave common stock that paid a dividend every year. On November 03, 2018, the corporation declared the dividend payable on December 05, 2018, to shareholders of record as of November 22, 2018. The corporation has paid the $1,000 dividend once each year for the past ten years, during which Bob owned the stock. Dave collected the dividend on December 15, 2018. Assuming Bob and Dave are in the Tax Court’s jurisdiction, who recognizes the dividend for tax purposes?
Q.4 George purchased stock in 2016 for $20,000. He gave the stock to his son, William, in 2017. On the date of the gift the FMV of the stock was $14,500 and no gift tax was paid on the transfer. William later sold the stock for $12,700. What is William’s recognize gain or loss on the sell of the stock:
Q.5 For the current year, David has salary income of $125,000 and the following property transactions:
|
Stock investment sales |
|
|
Long-term |
$ 9,000 |
|
Short-term capital loss |
(19,500) |
|
Gain on sale of camper (purchased 4 years ago and used for family vacations) |
8,000 |
What is David’s AGI for the current year?
Q.6 On November 15, 2018, Bob, a cash basis taxpayer, gave his son Dave common stock that paid a dividend every year. On November 03, 2018, the corporation declared the dividend payable on December 05, 2018, to shareholders of record as of November 22, 2018. The corporation has paid the $1,000 dividend once each year for the past ten years, during which Bob owned the stock. Dave collected the dividend on December 15, 2018.
Assuming Bob and Dave are in the Tax Court’s jurisdiction, who recognizes the dividend for tax purposes? Explain your answer.
Q.4 :
When the stock is received as a gift, then the value of gift is determined by the
1. Giver's original cost basis
2. Fair market value basis of the stock at the time of receiving the gift
If the fair value of the stock gift is more than the original cost, then the original cost should be taken at the time of sale.
If the fair value of the stock gift is less than the original cost,
a. More than the original cost, use original cost for sale consideration
b. More than original cost but less than the fair value at the time of gift, selling price becomes cost. No gain or loss in this case.
c. Less than the fair value, use fair value at the time of gift.
Given that,
George purchased stock in 2016 = $20000
Gifted the stock to his son, William in 2017.
On the date of gifting, Fair value = $14500
Later sold the stock = $12700
Here, the sale value of the stock i.e., $12700 is less than the fair value of the stock i.e., $14500.
Therefore, Fair value of the stock should be considered.
Hence, the loss on sell of stock = $12700 - $14500
= ($1800)
The loss on sell of the stock of William = ($1800).
George purchased stock in 2016 for $20,000. He gave the stock to his son, William, in 2017. On the date of the gift the FMV of the stock was $14,500 and no gift tax was paid on the transfer. William later sold the stock for $12,700. What is William’s recognize gain or loss on the sell of the stock:
Q.5 :
Given that,
David salary income = $125000
Other incomes from :
1. Long term capital gain = $9000
2. Short term capital loss = ($19500)
3. Gain on sale of camper (purchased 4 years ago and used for family vacations) = $8000
The Adjusted Gross Income(AGI) is total of the incomes from different sources.
Loss of short term capital = ($19500) is deducted with AGI since it is a loss from short term investments which have less than one year life.
Gain on sale of camper which was purchased 4 years ago is a long term investment and it is used for family vacations.
Here, the camper which is a long term investment irrespective of uses, then included in AGI.
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