FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Karen purchased land valued at $100,000 with virtual currency she had been given by her father
who purchased it for $60,000. The virtual currency had a value on the date of the gift equal to
$85,000 (i.e., a taxable gift of $69,000) on which he paid a $17,940 gift tax. What income, if any,
must Karen recognize as a result of her purchase
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- Many years ago James and Sergio purchased property for $945,000. Although they are listed as equal co-owners, Sergio was able to provide only $420,000 of the purchase price. James treated the additional $52,500 of his contribution to the purchase price as a gift to Sergio. Required: If the property is worth $1,134,000 at Sergio's death, what amount would be included in Sergio's estate if the title to the property was tenants in common? What if the title was joint tenancy with right of survivorship? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Amount to be included in Sergio's estate if: Title to the property was tenants in common Title to the property were joint tenancy with right of survivorshiparrow_forwardJoyce is a widowed taxpayer whose husband Willard passed away on March 31, 2020. Joyce and Willard had purchased a home for $215,000 on September 12, 2004, lived in the home as their main home until Willard's death. Joyce moved in with her daughter after Willard's death, and sold the home on November 30, 2020 , for $595,000. How much of the gain on the sale can Joyce exclude from taxable income? Select one: O a. $500,000, the maximum exclusion for an unmarried surviving spouse O b. $380,000, the amount of gain on the sale of the home O C. $250,000, the maximum exclusion amount for a single taxpayer O d. $0, because she moved out before she sold the homearrow_forwardDexter owns a large tract of land and subdivides it for sale. Assume that Dexter meets all of the requirements of § 1237 and during the tax year sells the first eight lots to eight different buyers for $159,400 each. Dexter's basis in each lot sold is $111,580, and he incurs total selling expenses of $6,376 on each sale. What is the amount of Dexter's capital gain and ordinary income? If required, round your answers to the nearest dollar. Dexter has a realized and recognized gain of $ as a capital gain. of which $ is classified as ordinary income andarrow_forward
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- Carl made the following transfers during the current year. What are Carl’s taxable gifts for the current year? 1.Transferred $900,000 in cash and securities to a revocable trust, life estate to himself and remainder interest to his three adult children by a former wife. 2.In consideration of their upcoming marriage, gave Maria a $90,000 convertible. 3.Purchased a $100,000 certificate of deposit listing title as “Carl, payable on proof of death to Maria.” 4.Established a joint checking account with his now-wife, Maria, in December of the current year with $30,000 of funds he inherited from his parents. In January of the following year, Maria withdrew $18,000 of the funds. 5.Purchased for $80,000 a paid-up insurance policy on his life (maturity value of $500,000). Carl designated Maria as the beneficiary. 6.Paid $23,400 to a college for his niece Mindy’s tuition and $11,000 for her room and board. Mindy is not Carl’s dependent. 7.Gave his aunt Betty $52,000 for her heart bypass…arrow_forwardAlicia sold her personal residence to Rick for $300,000. Before the sale, Alicia paid the real estate tax of $4,380 for the calendar year. For income tax purposes, the deduction is apportioned as follows; $2,160 for Alicia and $2,220 for Rick. What is Ricks basis in the residence?arrow_forwardRandy established a trust, reserving in himself the power to terminate the trust if he is not satisfied with its operation. After two years, the power to terminate the trust expires. Randy transferred commercial real estate into the trust and specified that the income be payable annually for the benefit of his adult daughter, Michelle. Randy died one year after creation of the trust instrument. One estate tax implication for Randy of this trust is that the trust property is A) included in his estate because a family member is receiving a benefit from the trust. B) not included in his estate because a transfer for the benefit of a minor is exempt from tax. C) included in Randy's estate because he still had the power to terminate the trust at his death. D) not included in his estate because the power to terminate the trust eventually expires.arrow_forward
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