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Yuri [45]
2 years ago
6

An individual taxpayer is selling her principal residence, which she has owned for ten years and lived in for nine years. What s

ection and subsection of the Internal Revenue Code states the amount of gain the taxpayer can exclude from gross income from the sale of her principal residence
Business
1 answer:
avanturin [10]2 years ago
7 0

Answer:

Section 121 exclusion

Explanation:

In simple words, IRC section 121 requires a person to deduct up to $250,000 ($500,000 for dual filers) of profit from the selling (or exchange) of land that was purchased and utilized as a primary home for at minimum two of that five years preceding the sale. Thus, from the above explanation we can conclude that the correct answer is section 121 exclusion.

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5 0
3 years ago
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Firm A and B have identical business except that their financing is different: Firm A: EBIT = X = $10, D = $20 Firm B: EBIT = X
STALIN [3.7K]

Answer:

1. Which firm has a greater FCF (free cash flow)?

  • (A) Firm A

2. What is firm A’s (annual) tax shield?

  • (B) $0.8

3. What is firm B’s (annual) tax shield?

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Explanation:

since firm A's debt is $20, its value is $100, then its equity = $80

since firm B's debt is $80, its value is $100, then its equity = $20

Firm A's cash flow = (EBIT - interest expense) x (1 - tax rate) = [$10 - ($20 x 10%)] x 0.6 = $4.80

Firm B's cash flow = (EBIT - interest expense) x (1 - tax rate) = [$10 - ($80 x 10%)] x 0.6 = $1.20

Firm A's annual tax shield = taxable interest x tax rate = ($20 x 10%) x 40% = $0.80

Firm B's annual tax shield = taxable interest x tax rate = ($80 x 10%) x 40% = $3.20

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3 years ago
Curtis invests $250,000 in a city of athens bond that pays 7% interest. alternatively, curtis could have invested the $250,000 i
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I guess the correct answer is 6.48%

If Curtis invested in the Initech, Inc. bonds, The after-tax rate of return from this investment is 6.48%.

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Explanation:

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Answer:

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Explanation:

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