In a raffle, 5000 tickets are being sold at $1 each. There is a first prize of $700, three second prizes of $500 each, and five third prizes of $100 each. Susan buys a ticket. What would have been a fair price for a ticket? How much extra did Susan pay?

In a raffle, 5000 tickets are being sold at $1 each. There is a first prize of $700, three second prizes of $500 each, and five third prizes of $100 each. Susan buys a ticket. What would have been a fair price for a ticket? How much extra did Susan pay?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter9: Deductions: Employee And Self- Employed-related Expenses

Section: Chapter Questions

Problem 49P

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

In a raffle, 5000 tickets are being sold at $1 each. There is a first prize of $700,
three second prizes of $500 each, and five third prizes of $100 each. Susan buys a ticket.
What would have been a fair price for a ticket? How much extra did Susan pay?

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