MCGRAW-HILL'S TAX.OF INDIV.+...(LL)2020
20th Edition
ISBN: 9781260432374
Author: SPILKER
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 3, Problem 57P
To determine
Identify the tax savings from the special tax treatment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his
stocks has a special designation, which allows him to treat a loss up to $30,000 on this stock as an ordinary loss rather than the typical
capital loss. Daniel figures that he has a loss of $36,000 on each stock. If Daniel's marginal tax rate is 35 percent and he has $72,000
of other capital gains (taxed at 15 percent), what is the tax savings from the special tax treatment?
Tax savings
Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his stocks has a special designation, which allows him to treat a loss up to $76,000 on this stock as an ordinary loss rather than the typical capital loss. Daniel figures that he has a loss of $91,200 on each stock. If Daniel’s marginal tax rate is 35 percent and he has $182,400 of other capital gains (taxed at 15 percent), what is the tax savings from the special tax treatment?
Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his
stocks has a special designation, which allows him to treat a loss up to $64,000 on this stock as an ordinary loss rather than the typical
capital loss. Daniel figures that he has a loss of $76,800 on each stock. If Daniel's marginal tax rate is 35 percent and he has $153,600
of other capital gains (taxed at 15 percent), what is the tax savings from the special tax treatment?
Lassensti
Chapter 3 Solutions
MCGRAW-HILL'S TAX.OF INDIV.+...(LL)2020
Ch. 3 - 1. The goal of tax planning is to minimize taxes....Ch. 3 - Prob. 2DQCh. 3 - In this chapter we discussed three basic tax...Ch. 3 - What are the two basic timing strategies? What is...Ch. 3 - Prob. 5DQCh. 3 - What are some common examples of the timing...Ch. 3 - What factors increase the benefits of accelerating...Ch. 3 - How do changing tax rates affect the timing...Ch. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Prob. 11DQCh. 3 - What two factors increase the difference between...Ch. 3 - What factors have to be present for income...Ch. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Explain how implicit taxes may limit the benefits...Ch. 3 - Prob. 21DQCh. 3 - Do after-tax rates of return for investments in...Ch. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - What is an implicit tax and how does it affect a...Ch. 3 - Several judicial doctrines limit basic tax...Ch. 3 - What is the constructive receipt doctrine? What...Ch. 3 - Prob. 29DQCh. 3 - Relative to arms length transactions, why do...Ch. 3 - Prob. 31DQCh. 3 - Prob. 32DQCh. 3 - Prob. 33DQCh. 3 - Prob. 34DQCh. 3 - Yong recently paid his accountant 10,000 for...Ch. 3 - Billups, a physician and cash-method taxpayer, is...Ch. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Orie and Jane, husband and wife, operate a sole...Ch. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Prob. 63PCh. 3 - Prob. 64PCh. 3 - Prob. 65P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Marlo and Merlins son, Alex, needs 20,000 to start a business. They have 30,000 in securities that they can use to give him the capital he needs. Pertinent information regarding the securities is given below: Marlo and Merlin are in the 28 percent marginal tax rate bracket; Alex is in the 15 percent marginal tax rate bracket. Neither Marlo, Merlin, nor Alex has any other capital asset transactions during the year. Alexs basis in any of the securities gifted to him will be the lesser of his parents basis or the fair market value of the security. Discuss the tax effects of alternate methods of transferring 20,000 to Alex, and devise an optimal plan for making the transfer.arrow_forwardSamuel Jenkins made two invstments, the first was 13 months ago and the second was two months ago. He just sold both investments and has a capital gain of $3,000 on each. If Samuel is in the 28 percent tax bracket, what will be the amount of capital gains tax on each investment?arrow_forwardHelen holds 1,000 shares of Fizbo Incorporated stock that she purchased 11 months ago. The stock has done very well and has appreciated $20/share since Helen bought the stock. When sold, the stock will be taxed at capital gains rates (the long-term rate is 15 percent and the short-term rate is the taxpayer's marginal tax rate). Ignore the time value of money. a. If Helen's marginal tax rate is 35 percent, how much would she save by holding the stock an additional month before selling? Tax savings b. What might prevent Helen from waiting to sell? Helen bears if she holds the stock for an additional month. The stock price could substantially if there is market volatility or if the company encounters financial difficulties. In addition, Helen may be selling the stock for which she may be unwilling to wait.arrow_forward
- Pear, an individual, plans to start a small business, which will operate as a corporation. In year 0, she expects the corporation to generate an ordinary loss of $950,000. Subsequently, she expects the corporation to be profitable, and projects ordinary profit of $1,425,000 in year 1, and $2,375,000 in year 2. Pear's personal marginal tax rate on ordinary income is 37%. Assuming a corporate tax rate of 21% and a 10% discount rate, calculate the present value of expected tax costs on the business earnings for the first 3 years of operations if the business does not make an S corporation election. Assume the excess business loss limitation does not apply. Round your discount rate calculations to three decimal places. O $853,623 O $896,325 O$1.128,600 $502,640arrow_forwardCapital Gains Tax. Joel purchased 100 shares of stock for $10 per share. During the year, he received dividend checks amounting to $86. Joel recently sold the stock for $17 per share. Joel is in a 35% tax bracket. He would pay $245 in taxes if he held the stock for less than a year. How much would Joel save in taxes if he held the stock for more than a year, assuming he sold it for the same amount? If he held the stock for more than a year, the amount Joel would save in taxes is $ (Round to the nearest dollar.)arrow_forwardPear, an individual, plans to start a small business, which will operate as a corporation. In year 0, she expects the corporation to generate an ordinary loss of $1,650,000. Subsequently, she expects the corporation to be profitable, and projects ordinary profit of $2,475,000 in year 1, and $4,125,000 in year 2. Pear's personal marginal tax rate on ordinary income is 37 Assuming a corporate tax rate of 21% and a 10% discount rate, calculate the present value of expected tax costs on the business earnings for the first 3 years of operations if the business makes an S corporation election. Assume the excess business loss limitation does not apply. Round your discount rate calculations to three decimal places. $1,556,775 $1,482,599 $1,960,200 $873,015arrow_forward
- Cory recently sold his qualified small business stock for $87,000 after holding it for 10 years. His basis in the stock is $43,000. Applying the rules as if the stock were acquired in 2022 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?arrow_forwardTom sold mutual fund shares he had him three years ago so that he could use the proceeds to return to college Thomas in the 15% marginal tax bracket in his capital gains from the scale were $96,355. How much tax would Tom Owen those gains?arrow_forwardTom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were $89,659. How much tax would Tom owe on those gains?arrow_forward
- Natalie expects her ordinary income to exceed $600,000 putting her in the 37 marginal percent tax bracket for 2019. So far this year, she has a $5,000 short-term capital loss. As of June 1, she is holding 1,000 shares of Dritco stock purchased on June 15 of last year for $15,000. The market value of the stock as of May 21 is $27,000. Lately the value of the stock has been decreasing and Natalie feels it may go down by $1,000 or so in the next month and probably stabilize thereafter. Advise Natalie as to the various courses of action she might takearrow_forwardMark's father, Michael, loaned Mark $300,000 interest free for five years to invest in securities that yield a 10 percent annual return. At the end of the five years, Mark sells the securities to repay his father. Unfortunately, the market declined and Mark was able to sell the securities for only $280,000. Michael accepted the $280,000 as payment in full on the loan. How do you think this transaction will be treated for tax purposes?arrow_forwardIsabel, a calendar year tax payer, uses the cash method of accounting for her soul proprietor ship. In late December she received a $60,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $60,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments. What is the after-tax cost if Isabel pays the $60,000 bill in January?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you