Question

2. Terry owns land that she acquired three years ago as an investment for $250,000. Because the land has not appreciated in value as she had anticipated, she sells it to her brother, Chris, for its fair market value of $180,000. Chris sells the land two years later for $240,000. What are the tax consequences for Terry and Chris?

3. Sam and Fran are married with 3 dependent children. They file a joint return in 2020. Their salaries totaled $175,000. They earned taxable interest income of $3,600. Fran received a cash gift from her parents of $10,000. Sam inherited stock from his uncle. At the time of his uncle's death the stock was valued at $20,000. The uncle's original cost basis was $12,000. Sam sold the stock for $23,000 on December 30th and received the proceeds on Jan. 2nd. What is Sam and Fran's tax liability?

Answer 1

1.Terry has incurred longterm loss of (250000-180000)=$7000. the maximum allowed deduction allowed will be $3000. and balance brought forward loss would be $4000. for Chris taxable long term capital gain would be ( 240000-180000) $6000.

2.

SAM AND FRAN INCOME

salaries

$175,000.00

interest income

$3,600.00

long term capital gain

$3,000.00

AGI

$181,600.00

less:

standard deduction

$24,800.00

tax credit for child $2000

$6,000.00

per child 2000*3

Taxable income

$150,800.00

TAX LIABILITY (150800-3000)=

$147,800

(9235+(147800-80250)*0.22)

$24,096.00

LONG TERM CAPITAL GAIN TAX=.15*$3000

450

TOTAL TAX LIABILITY OF Sam and FRAN

$24,546.00

long term capital gain of $ 3000 would be taxed separately

note: cash gift parents $10000 would be exempt. When Sam inhertited stock gain on inheritance $8000 (20000-12000) is exmept. Long term capital gain on stock (23000-20000) 3000 would be taxable in DEC

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