Jessica retires from Apple Computer, where she was an executive who participated in several stock purchase plans. On November 30, 2018, after retirement Jessica sells stock for $8 Million, and this stock had a tax basis of $3 Million to Jessica. She decides to defer taxes by investing in a Qualified Opportunity Fund. In April 2019 Jessica invests $5 Million in a qualifying fund. She remains an owner until February 2031, at which time the investment is sold and Jessica receives $15 Million. How much gain does Jessica recognize in:
2018, the year her stock is sold____________________________________
2031, the year she terminates the investment________________________
Any other Year????? (year and what is reported)
Specify the year ___________________________
Specify the gain ____________________________
| Jessica shall recognise gain from accounting prospective as following: | |||||||||
| Gain shall be recognised in 2018 (sell amount $ 8 millions - tax basis of 3 millions) = $ 5 millions | |||||||||
| Gain shall be recognised in 2031 (sell amount $ 15 millions - tax basis of 5 millions) = $ 10 millions | |||||||||
| It is assumed tax basis is s same as investment cost. | |||||||||
| In 2009 gain to be recognised $ 5 millions ( $ 8million - $ 3 millions) as per taxation point of view as | |||||||||
| income deferred by investing in qualified opportunity bond. | |||||||||
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