SWFT Individual Income Taxes
43rd Edition
ISBN: 9780357391365
Author: YOUNG
Publisher: Cengage
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- 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?arrow_forwardLO.4 Vic, who was experiencing financial difficulties, was able to adjust his debts as follows: a. Vic is an attorney. Vic owed his uncle 25,000. The uncle told Vic that if he serves as the executor of the uncles estate, Vics debt will be canceled in the uncles will. b. Vic borrowed 80,000 from First Bank. The debt was secured by land that Vic purchased for 100,000. Vic was unable to pay, and the bank foreclosed when the liability was 80,000, which was also the fair market value of the property. c. The Land Company, which had sold land to Vic for 80,000, reduced the mortgage on the land by 12,000. Determine the tax consequences to Vic.arrow_forward
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