Question

Abby, a single taxpayer, purchased 10,000 shares of § 1244 stock several years ago at a cost of $20 per share. In November of the current year, Abby received an offer to sell the stock for $12 per share. She has the option of either selling all of the stock now or selling half of the stock now and half of the stock in January of next year. Abby will receive a salary of $80,000 for the current year and $90,000 next year. Abby will have long-term capital gains of $8,000 for the current year and $10,000 next year.

If Abby's goal is to minimize her AGI for the two years, determine whether she should sell all of her stock this year or half of her stock this year and half next year.

a. Determine Abby's total AGI under both options for the current year and next year.

If an amount is zero, enter "0".

Sell all of the stock this year: Current year's AGI Salary $80,000 Ordinary loss $ Long-term capital gain $8,000 Less: long-term capital loss $ Equals: net long-term capital loss $ Deductible net long-term capital loss $ Adjusted gross income $ $ Next year's AGI Salary $90,000 Long-term capital gain $10,000 Less: net long-term capital loss carryover $ Equals: net long-term capital loss (before limitation) $ $ Adjusted gross income $ Total AGI Current year $ Next year Total $ Sell half of the stock this year and half next year: Current year's AGI Salary $80,000 $ Long-term capital gain $8,000 Less:   $ Equals:   $ $ Adjusted gross income $ Next year's AGI Salary $90,000 $ Long-term capital gain $10,000 Less:   $ $ Adjusted gross income $ Total AGI Current year $ Next year Total $

Answer 1

Answer:-

Sell all of the stock in the current year:

Abby’s combined AGI for the two years is lower if she sells half of her § 1244 stock this year and half next year.