Question

Cory recently sold his qualified small business stock for $90,000 after holding it for 10 years....

Cory recently sold his qualified small business stock for $90,000 after holding it for 10 years. His basis in the stock is $40,000. Applying the rules as if the stock were acquired in 2019 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?

Homework Answers

Answer #1

As per Sec 1202 of Internal Revenue Code allows investors to take exemption of 100% of capital gains on qualified small business stock (QSBS)

THIS Exemption on capital gains has the limit of $10 million or 10 times the adjusted basis of stock which ever is greater the capital gains above the limit are taxable

sale proceeds of capital stock $90,000
basis for the stock $40,000
capital gains for the stock

$50,000

as the capital gain below the limit of $10 million ,above capital gain Qualifies for the exemption u/s 1202

so the taxable payable on sale will be $0

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
Cory recently sold his qualified small business stock for $90,000 after holding it for 10 years....
Cory recently sold his qualified small business stock for $90,000 after holding it for 10 years. His basis in the stock is $40,000. Applying the rules as if the stock were acquired in 2020 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?
Casey recently sold his qualified small business stock for $83,000 after holding it for 10 years....
Casey recently sold his qualified small business stock for $83,000 after holding it for 10 years. His basis in the stock is $47,000. Applying the rules as if the stock were acquired in 2020 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale? Multiple Choice $2,700. $5,040. $5,400. $10,080.
Horace was a participant in a qualified stock bonus plan. He sold stock 10 months after...
Horace was a participant in a qualified stock bonus plan. He sold stock 10 months after he received it as a distribution from the stock bonus plan. When the stock was distributed, Horace had a net unrealized appreciation of $10,000. He also had ordinary income of $25,000. The fair value of the stock at the time of sale was $75,000. How much of the sale price will be subject to long term capital gain treatment? $40,000 $10,000 25,000 $50,000
James, a single taxpayer, acquired stock in a corporation that qualified as a small business corporation...
James, a single taxpayer, acquired stock in a corporation that qualified as a small business corporation under Section 1244, at a cost of $120,000 two years ago. James gives the stock to his daughter. The daughter sells the stock for $10,000 two years later. How will the stock be treated for tax purposes, give the dollar amounts?
Ms. D sold a business that she had operated as a sole proprietorship for 18 years....
Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Accounts receivable$50,750 Inventory 153,600 Furniture and equipment:     Cost 60,000 Accumulated depreciation (48,000) Leasehold improvements:     Cost 24,500   Accumulated amortization (4,900) The purchaser paid a lump-sum price of $303,750 cash for the business. The sales contract stipulates that the FMV of the business inventory is $170,000, and the FMV of the remaining balance sheet...
Ms. D sold a business that she had operated as a sole proprietorship for 18 years....
Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Accounts receivable$50,750 Inventory 153,600 Furniture and equipment: Cost 60,000 Accumulated depreciation (48,000) Leasehold improvements: Cost 24,500 Accumulated amortization (4,900) The purchaser paid a lump-sum price of $303,750 cash for the business The sales contract stipulates that the FMV of the business inventory is $170,000, and the FMV of the remaining balance sheet...
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended...
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2019, and each contributed $50,000 in exchange for a 50 percent ownership interest. GTE also borrowed $200,000 from a local bank. Both James and Paul had to personally guarantee the loan....
Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley...
Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley has owned each of the assets since he began the business. In the current year, Buckley sold the following business assets: Asset Accumulated Original Cost Depreciation Gain/Loss Computers $ 6,000 $ 2,000 $ (3,000) Machinery 10,000 4,000 (2,000) Furniture 20,000 12,000 7,000 Building 100,000 10,000 (1,000) Assuming Buckley’s marginal ordinary income tax rate is 32 percent, answer the questions for the following alternative scenarios:...
Mr. Young operates a photography studio as a sole proprietorship. His average annual income from the...
Mr. Young operates a photography studio as a sole proprietorship. His average annual income from the business is $100,000. Because Mr. Young does not need the entire cash flow for personal consumption, he is considering incorporating the business. He will work as a corporate employee for a $40,000 annual salary, and the corporation will accumulate its after-tax income to fund future business expansion. For purposes of this case, assume that Mr. Young’s marginal income tax rate is 32 percent and...
1. Phil’s father, who died on January 10, 2019. had owned stock for 20 years with...
1. Phil’s father, who died on January 10, 2019. had owned stock for 20 years with a basis of $45,000 that was transferred to Phil as a gift on August 10, 2018, when the stock was worth $430,000. Phil's father had paid no gift taxes. This stock was worth $566,000 at the date of the father’s death. Phil sold the stock for $545,000 net of commissions on February 23, 2019. What is the amount of Phil’s gain or loss from...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT