Questions from Federal Taxation

Q: Tally owns a house that she has been living in for eight

Tally owns a house that she has been living in for eight years. She purchased the house for $245,000 and the FMV today is $200,000. She is moving into her friend’s house and has decided to convert her...

Q: An individual taxpayer has realized a $40,000 loss on

An individual taxpayer has realized a $40,000 loss on the sale of an asset that had a holding period of eight months. Explain why the taxpayer may be indifferent as to whether the asset is a capital a...

Q: Martha Lou owns 100 shares of Blain Corporation common stock. She

Martha Lou owns 100 shares of Blain Corporation common stock. She purchased the stock on July 25, 1986, for $4,000. On May 2 of the current year, she receives a nontaxable distribution of 100 stock ri...

Q: Beth acquired only one tract of land seven years ago as an

Beth acquired only one tract of land seven years ago as an investment. In order to sell the land at a higher price, she decides to subdivide it into 20 lots. She pays for improvements such as clearing...

Q: An investor in a 28% tax bracket owns land that is

An investor in a 28% tax bracket owns land that is a capital asset with a $50,000 basis and a holding period of three years. The investor wishes to sell the asset at a price high enough so that he wil...

Q: Mr. and Mrs. Dunbar have taxable income of $260

Mr. and Mrs. Dunbar have taxable income of $260,000 without considering the following sales. Consider the following independent cases where capital gains are recognized and determine the marginal tax...

Q: Consider the four independent situations below for an unmarried individual, and

Consider the four independent situations below for an unmarried individual, and analyze the effects of the capital gains and losses on the individual’s AGI. For each case, determine...

Q: a. What determines who must file a tax return?

a. What determines who must file a tax return? b. Is an individual required to file a tax return if he or she owes no tax?

Q: Tax rules are often very precise. For example, a taxpayer

Tax rules are often very precise. For example, a taxpayer must ordinarily provide “over 50%” of another person’s support in order to claim a dependency exemption. Why is the threshold “over 50%” as op...

Q: Explain the purpose of the multiple support agreement.

Explain the purpose of the multiple support agreement.