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tax-In 2013, Alva received dividends on her stocks as follows:




Question;43., In 2013, Alva received dividends on her stocks as follows:Amur Corporation (a French corporation whose stock is traded on an established U.S. securities market) $60,000Blaze, Inc., a Delaware corporation 40,000Grape, Inc., a Virginia corporation 22,000a. Alva purchased the Grape stock three years ago, and she purchased the Amur stock two years ago. She purchased the Blaze stock 18 days before it went ex-dividend and sold it 20 days later at a $5,000 loss. Alva had no other capital gains and losses for the year. She is in the 35% marginal tax bracket. Compute Alva?s tax on her dividend income for 2013.b. Alva?s daughter, who is 25 and not Alva?s dependent, had taxable income of $6,000, which included $1,000 of dividends on Grape, Inc. stock. The daughter had purchased the stock two years ago. Compute the daughter?s tax liability on the dividends.c. Alva can earn 5% before-tax interest on a corporate bond or a 4% dividend on a preferred stock. Assuming that the appreciation in value is the same, which investment produces the greater after-tax income?d. The same as part (c), except that Alva?s daughter is to make the investment.44. LO.3 Liz and Doug were divorced on December 31 of the current year after 10 years of marriage. Their current year?s income received before the divorce was as follows:Doug?s salary $41,000Liz?s salary 55,000Rent on apartments purchased by Liz 15 years ago 8,000Dividends on stock Doug inherited from his mother 4 years ago 1,900Interest on a savings account in Liz?s name funded with her salary 2,400Allocate the income to Liz and Doug assuming that they live in:a. California.b. Texas.45. LO.4 Nell and Kirby are in the process of negotiating their divorce agreement. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement?a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby?s cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000.b. Nell will receive $1,000 per month for 120 months. If she dies before receiving all120 payments, the remaining payments will be made to her estate.c. Nell is to have custody of their 12-year-old son, Bobby. She is to receive $1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only $300 per month for the remainder of her life.46. LO.4 Samantha and Harold are in the process of negotiating a divorce. They have tentatively agreed on all of the terms, and Samantha is to pay Harold $240,000 over a threeyear period. Furthermore, the payments are to be spread over the three years in amounts that will qualify as alimony and minimize alimony recapture. Harold wants to receive as much of the $240,000 as soon as possible because if he dies or remarries within the three years, the payments will cease. Which of the following two patterns of payments will result in the least alimony recapture in year 3?YearOption 1:Amount PaidOption 2:Amount Paid1 $120,000 $100,0002 60,000 80,0003 60,000 60,000Total $240,000 $240,00047. LO.4 Alicia and Rafel are in the process of negotiating a divorce agreement. They both worked during the marriage and contributed an equal amount to the marital assets.They own a home with a fair market value of $400,000 (cost of $300,000) that is subject to a mortgage for $250,000. They have lived in the home for 12 years. They also have investment assets with a cost of $160,000 and a fair market value of $410,000. Thus, the net worth of the couple is $560,000 ($400,000? $250,000 + $410,000). The holding period for the investments is longer than one year. Alicia would like to continue to live in the house. Therefore, she has proposed that she receive the residence subject to the mortgage, a net value of $150,000. In addition, she would receive $17,600 each year for the next 10 years, which has a present value (at 6% interest) of $130,000. Rafel would receive the investment assets. If Rafel accepts this plan, he must sell one-half of the investments so that he can purchase a home. Assume that you are counseling Alicia.Explain to Alicia whether the proposed agreement would be ?fair? on an after-tax basis.


Paper#41286 | Written in 18-Jul-2015

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