***PLEASE SHOW WORK..THANK YOU... Bill and Alice are married, age 42 and 40, hav
ID: 2484116 • Letter: #
Question
***PLEASE SHOW WORK..THANK YOU... Bill and Alice are married, age 42 and 40, have no children and had the following transactions during 2014: a. They sold their old residence on January 28, for $380,000. The basis of their old residence, purchased in 1999, was $70,000. The selling expenses were $20,000. On May 17, they purchased and moved into another residence costing $150,000. b. On April 28, they sold for $8,000 stock that Alice had received as a gift from her mother, who had purchased the stock for $10,000 in 2004. Her mother gave Alice the stock on November 15, 2011, when the fair market value was $9,400. c. On May 24, Bill sold for $21,000 stock inherited from his father. His father died on June 14, 2008, when the fair market value of the stock was $9,000. Bill’s father paid $7,000 for the stock in 2002. d. On August 11, they sold a personal automobile for $8,000: basis of the automobile was $20,000 when it was purchased in 2006. e. They had carryover and other stock transactions as follows: LTCL carryover from 2013 ($7,000) STCG $2,000 LTCG $3,500 Bill had a salary of $40,000 and Alice had a salary of $28,000. They paid state income taxes of $32,000, sales tax of $400, federal income taxes of $15,000 and property taxes of $1,800. In addition they donated $5,600 to their church and paid $4,000 in home mortgage interest. Compute Bill and Alice’s taxable income and tax owed or refund for 2014.
Explanation / Answer
Determinationof taxable income is as follows:
S.no. Particulars Amount Amount a Capital gain on resicency sale Sale value 380000 Less: Cost 70000 Selling expense 20000 Long term capital gain 290000 Less: Exemption on purchase of another 150000 Net taxable value 140000 b Stock received as a gift is exempted c Sale of stock 21000 Less: Cost 7000 Taxable income 14000 d Capital gain on sale of auto mobile Sale value 8000 Less: Basis 20000 Long term capital loss -12000 Taxable capital gains Long term capital gain 140000 Long term capital loss 12+3 15000Related Questions
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