In: Economics
Case 5: Tim bought a house for $500,000 in 2005 in California. When his daughter Mary got married in August 2010, he gave the house to Mary as a wedding gift. The fair market value of the house was $400,000. Mary and her husband Jerry have lived in the house since then.
1. How much is the taxable gift?
2. If later Mary wants to divorce Jerry, they will split the house value 50/50. (True or False)If Mary and Jerry sell the house for $550,000 in April 2011:
3. What is the amount of capital gain (or capital loss)? Is the capital gain/loss long term or short term?If Mary and Jerry sell the house for $450,000 in April 2011:
4. What is the amount of capital gain (or capital loss)? Is the capital gain/loss long term or short term?If Mary and Jerry sell the house for $350,000 in April 2011:
5. What is the amount of capital gain (or capital loss)? Is the capital gain/loss long term or short term?