Question

Lilia an investor purchased an art painting 5 years ago for 50000. in 2017 she sold...

Lilia an investor purchased an art painting 5 years ago for 50000. in 2017 she sold the painting for 500000. how much federal tax must she pay on the sale?

Homework Answers

Answer #1

Step 1: Here, the asset is held for more than a year so it's considered to be long term.

Step 2: Even if you are in the high tax bracket you ought to pay 28% on gain on the sale of collectible while the low tax bracket investors will gain over the rate of tax and hit an extra.

Step 3: Broker fee, Auction fee, Maintenance or any repairs to the asset, Restoration costs and Cost of the item form the basis for the calculation of the gain of the art. These are added and later the sale value is deducted from it and then the tax rate are induced on the remaining amount.

Step 4: So the capital gain is 500000 - 50000 = 450000.

Step 5: The tax rate is 28% induced on 450000 which gets to be 126000.

Additional information: The tax rate for short term capital gain will be based on the ordinary income tax rate bracketed people as induced on the stocks and bonds of 35% and here this will not be the case as the collectible is held for more than a year.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Martha sold some stock purchased several years ago for $20,000 at a sale price of $15,000....
Martha sold some stock purchased several years ago for $20,000 at a sale price of $15,000. She paid a $20 commission on the sale. How much gross income would be included from this sale?
19. Rafaela donated a painting to a registered charity. An independent appraiser valued the painting at...
19. Rafaela donated a painting to a registered charity. An independent appraiser valued the painting at $150,000. Rafaela bought the painting eight year ago for $60,000. Her income from other sources is $70,000. a) What is her taxable income for the year? b) How much of the $150,000 donation can she claim in the current year? c) What is the value of her federal tax credit for the year? d) How much of the donation can she carry forward to...
Rafaela donated a painting to a registered charity. An independent appraiser valued the painting at $150,000....
Rafaela donated a painting to a registered charity. An independent appraiser valued the painting at $150,000. Rafaela bought the painting eight years ago for $60,000. Her income from other sources is $70,000. a) What is her taxable income for the year? b) How much of the $150,000 donation can she claim in the current year c) What is the value of her federal tax credit for the year? d) How much of the donation can she carry forward to subsequent...
Richard sold some of his stock portfolio to pay for art classes for Donald. He sold...
Richard sold some of his stock portfolio to pay for art classes for Donald. He sold 3,200 shares of SpaceCo stock for $60 a share on June 16, 2017. He purchased the stock on June 12, 2002, for $45 a share. There was a commission charge of $175 on the sale of these shares. He also sold 5,500 shares of GameCo stock for $17 a share on February 5, 2017. He purchased the stock for $32 a share on December...
3. Julia purchased land three years ago for $50,000. She gave the land to Robert, her...
3. Julia purchased land three years ago for $50,000. She gave the land to Robert, her brother, in the current year, when the fair market value was $70,000. No gift tax is paid on the transfer. Robert subsequently sells the property for $63,000. a. What is Robert’s basis in the land, and what is his realized gain or loss on the sale? b. Assume, instead, that the land has a fair market value of $45,000 and that Robert sold the...
5.   Christina had a $12,000 gain on the sale of stock purchased three years ago, a...
5.   Christina had a $12,000 gain on the sale of stock purchased three years ago, a $4,000 loss on selling stock she had only owned for 3 months, a $5,000 loss on the sale of her personal use auto, and a $5,000 loss from the sale of land used in her business (owned for six years). Chris had no other property transactions this year. What will be the net effect of these transactions on Chris' tax return, in terms of...
Becky Bell owned common stock in a corporation that she purchased two years ago for $25,000....
Becky Bell owned common stock in a corporation that she purchased two years ago for $25,000. On June 6, 2016, Becky sold the stock for its $11,000 fair market value to her son, Max Monroe. On December 19, 2016, Max sells the stock to an unrelated party for its $13,000 fair market value. How much gain or loss will Becky and Max recognize on their respective income tax returns for 2016? 1) $0 and $0, respectively. 2) ($14,000) and $0,...
A corporation bought a machine 5 years ago for $144,000 and sold it today for $55,000....
A corporation bought a machine 5 years ago for $144,000 and sold it today for $55,000. The machine was being depreciated to a zero salvage value using straight-line method over 8 years. If the firm’s tax rate is 34%, what is the tax effect of the sale?
An investor wants to purchase a mortgage. The loan under consideration was $140,000 5 years ago...
An investor wants to purchase a mortgage. The loan under consideration was $140,000 5 years ago with monthly payments at 10% interest. The loan is fully amortizing over 30 years.   #1. What should the investor be willing to pay if their required return is 11% (**ANSWER I THINK** $125,352.88) #2. How does the answer in Part #1 change if it is assumed that the loan will be repaid in 5 years?  **NEED THIS ANSWER**
For the past 11 ​years, Erin has owned a boutique clothing store. She purchased the store...
For the past 11 ​years, Erin has owned a boutique clothing store. She purchased the store 11 years ago with a 15 year loan of ​$225,000 charging 6.7 annual interst with monthly payments. After making payments for the past 11 ​years, she sold the business for​ $450,000 and plans to use funds from the sale to pay off the remainder of her loan. Find the amount needed to pay off​ Erin's loan.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT