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Tom [10]
3 years ago
15

Eric and Katie, who are married, jointly own a house in which they have resided for the past 17 years. They sell the house for $

375,000 with realtor's fees of $10,000. Their adjusted basis for the house is $80,000. Since they are in their retirement years, they plan on moving around the country and renting. What is their recognized gain on the sale of the residence if they use the § 121 exclusion (exclusion of gain on sale of principal residence) and if they elect to forgo the § 121 exclusion?With Exclusion, Elect to Forgo
A) $0 $0
B) $35,000 $35,000
C) $0 $285,000
D) $35,000 $285,000
E) $285,000 $225,000
F) $0 $285,000
Business
1 answer:
Elodia [21]3 years ago
8 0

Answer:

C) $0 $285,000

Explanation:

The §121 exclusion establishes that homeowners can exclude from their capital gains taxes the sale of their property for a maximum of $250,000 gain (or $500,000 for joint filers) if they meet two criteria:

  • they owned the property for at last 5 years
  • they use the property as main residence for at least 2 years (they can aggregate time periods).

So if Eric and Katie use the §121 exclusion they wouldn't pay any capital gains tax ($500,000 is higher than $375,000).

If they decide to forgo the §121 exclusion, then they will have to pay taxes for a gain of:

capital gain = net sale price - asst basis

capital gain = ($375,000 - $10,000) - $80,000 = $365,000 - $80,000 = $285,000

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madam [21]

Answer:

To determine the total amount of money that I will have in my account at the time of my retirement, we must consider the total amount paid into the PIMCO account during the last 15 years, and add to this value the potential amount to be paid in the next 20 years in the Vanguard account.

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7 0
3 years ago
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Answer:

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5 0
2 years ago
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On January 2, 2009, L Co. issued at par $20,000 of 4% bonds convertible in total into 1,000 shares of L's common stock. No bonds
MrRissso [65]

Answer:

The correct answer is $1.2 per share.

Explanation:

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Interest expense of Bonds = $20,000 × 4% = $800

Now, Interest expense of Bond, After tax = $800 × ( 1 - 50%) = $800 × 0.50

= $400

So, we can calculate the diluted earning by using following formula:

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Where, Total outstanding shares = 1,000 shares + 1,000 shares = 2,000 shares

By putting the value, we get

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Answer:

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Answer:
B

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