John and Janet are both 61 years old, and they are still working at their current jobs. Neither one of them plans to retire until age 67. They sold their main home, and with the proceeds from the sale, they purchased a condominium and paid for it in full. They have $104,000 left in the bank. Which investment vehicle is appropriate if they want to avoid losing any of the money and use it all for their retirement?

John and Janet are both 61 years old, and they are still working at their current jobs. Neither one of them plans to retire until age 67. They sold their main home, and with the proceeds from the sale, they purchased a condominium and paid for it in full. They have $104,000 left in the bank. Which investment vehicle is appropriate if they want to avoid losing any of the money and use it all for their retirement?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter1: The Individual Income Tax Return

Section: Chapter Questions

Problem 12MCQ: Margaret, age 65, and John, age 62, are married with a 23 -year-old daughter who lives in their...

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Margaret, age 65, and John, age 62, are married with a 23 -year-old daughter who lives in their home. They provide over half of their daughter's support, and their daughter earned $4,100 this year from a part-time job. Their daughter is not a full-time student. The daughter can/cannot be claimed as a dependent because: She cannot be claimed because she is over 19 and not a full-time student. She can be claimed because she is a qualifying child. She can be claimed because she is a qualifying relative. She cannot be claimed because she fails the gross income test.
Wade paid 7,000 for an automobile that needed substantial repairs. He worked nights and weekends to restore the car and spent 2,400 on parts for it. He knows that he can sell the car for 13,000, but he is very wealthy and does not need the money. On the other hand, his daughter, who has very little income, needs money to make the down payment on a house. a. Would it matter, after taxes, whether Wade sells the car and gives the money to his daughter or whether he gives the car to his daughter and she sells it for 13,000? Explain. b. Assume that Wade gave the car to his daughter after he had arranged for another person to buy it from his daughter. The daughter then transferred the car to the buyer and received 13,000. Who is taxed on the gain?
Jed, age 55, is married with no children. During 2019, Jed had the following income and expense items: a. Three years ago, Jed loaned a friend 10,000 to help him purchase a new car. In June of the current year, Jed learned that his friend had been declared bankrupt and had left the country. There is no possibility that Jed will ever collect any of the 10,000. b. In April of last year, Jed purchased some stock for 5,000. In March of the current year, the company was declared bankrupt, and Jed was notified that his shares of stock were worthless. c. Several years ago Jed purchased some 1244 stock for 120,000, This year he sold the stock for 30,000. d. In July of this year, Jed sold some land that he had held for two years for 60,000. He had originally paid 42,000 for the land. e. Jed received 40,000 of interest income from State of Minnesota bonds. f. In September, Jeds home was damaged by an earthquake; Jeds county was declared a Federal disaster area by the President. Jeds basis in his home was 430,000. The value of the home immediately before the quake was 610,000. After the quake, the home was worth 540,000. Because earthquake damage was an exclusion on Jeds homeowners insurance policy, he received no insurance recovery. g. Jed received a salary of 80,000. h. Jed paid home mortgage interest of 14,000. i. If Jed files a joint return for 2019, determine his NOL. for the year.
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