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Estate Finance Family Tax Planning Question 1. Larry gives Jeff 1 share of David, Inc. stock...

Estate Finance Family Tax Planning Question

1. Larry gives Jeff 1 share of David, Inc. stock on January 2, 2002 that has a basis of $200,000. On January 2, 2002, 1 share of David Inc. stock has a fair market value of $100,000. On January 2, 2004, Jeff sells the share to Leon for $90,000. How much income or loss does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

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Answer #1

ANSWER:

Ans-1

Pay or misfortune to be perceived on the deal byJeff

Step-1

Count of sum to be discounted till January 2, 2004, in the announcement of benefit and misfortune account

In

Sum

Offer bought from Larry on January 2, 2002

200000

Honest assessment on January 2, 2004

100000

an abatement in estimation of offer which ought to be discounted to the announcement of benefit and misfortune account

100000

Clarification: Decrease in share cost ought to be account. as discounted to proclamation of benefit and misfortune account which is misfortune from the decrease in honest assessment (not the misfortune from the offer of offer )

Step-2

Computation of benefit and misfortune from the offer of offer

Honest evaluation on January 2, 2004

100000

Deal continues from Leon

- 90000

Misfortune from offer of offer

10000

Ans-3

Jeff's premise in stock and why

Clarification: according to. bookkeeping structure, offers ought to be record. at honest assessment. Thus Jeffs premise is in stocks are as per the following:

Jeff's premise in stock on January 2, 2002

200000

Jeff's premise in stock on January 2, 2004

100000

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