Angelina received $20,000 of qualified dividends this year. Under what circumstances would all $20,000 of the dividends
Question:
Angelina received $20,000 of qualified dividends this year.
Under what circumstances would all $20,000 of the dividends be taxed at the same rate? Be specific in your answer.
Under what circumstances would the $20,000 of dividends NOT be taxed at the same rate? Be specific in your answer.
QUESTION 1 (15 points)
Allen recently received 500 shares of restricted stock from his employer, Crazy Corporation, when the share price was $5 per share. Allen's restricted shares vested three years later when the market price was $12. Assuming a marginal tax rate of 32% on the vesting date, what is the amount of Allen's income, the character of the income and his tax liability assuming NO §83b election was made?
Amount | |
Character | |
Tax liability |
Allen held the shares for a little more than a year and sold them when the market price was $15 and his marginal tax rate was 35%. What is the amount of income, character of income and tax liability at the sale assuming NO §83b election was made?
Amount | |
Character | |
Tax liability |
Rick recently received 500 shares of restricted stock from his employer, Roundhouse Inc, when the share price was $5 per share. Rick's restricted shares vested three years later when the market price was $12. Assuming a marginal tax rate of 32% on the vesting date, what is the amount of Rick's income, the character of the income and his tax liability at the grant date assuming a valid §83b election was made?
Amount | |
Character | |
Tax liability |
Rick held the shares for a little more than a year and sold them when the market price was $15 and his marginal tax rate was 35%. What is the amount of income, character of income and tax liability at the sale assuming a valid §83b election was made?
QUESTION 2 (20 points)
Allen and Amanda Alexander got married 10 years ago and have a 5-year-old son Andy. In 2018, Allen worked as a computer technician at a local university earning a salary of $126,600, and Amanda worked part-time as a receptionist for a law firm earning a salary of $39,000. Allen also does some Web design work on the side and reported revenues of $14,000 and associated expenses of $5,750. The Alexanders received a $200 refund of their state income taxes. The Alexanders have always itemized their deductions and their itemized deductions were well over the standard deduction amount last year (2017).
The Alexanders reported making the following payments during the year (2018):
·State income taxes of $3,950. Federal tax withholding of $31,000.
·Alimony payments to Allen’s former wife $9,000 (divorced in 2014).
·Child support payments for Allen’s child with his former wife $7,100.
·$14,200 of real property taxes.
·$4,600 to Kid Care daycare center for Andy’s care while John and Amanda worked.
·$16,500 interest on their home mortgage (acquisition debt of $600,000)
·$3,000 interest on a $60,000 home-equity loan. They used the loan to pay for family vacation and new car.
·$19,550 cash charitable contributions to qualified charities.
·Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000.
Determine the amounts listed below (including any self-employment tax, if applicable – ignore AMT) for John and Amanda for the year.
Gross Income | |
FOR AGI deductions | |
AGI | |
FROM AGI deductions | |
Standard Deduction | |
Taxable Income | |
Tax Liability | |
Prepayments | |
Credits | |
Amount Due or Refund |
Show work
QUESTION 3 (15 points)
Nick Marvel acquired a passive partnership activity in January of 2013. His at-risk basis at the beginning of 2017 was $45,000. Nick Marvel also owns a rental property that generated income of $15,000 in 2017and $12,000 in 2018. Nick Marvel’s share of income and loss from the partnership activity is:
2017 <$69,000>
2018 25,000
Complete the following tables.
AT RISK RULES ONLY
FOR 2017
Deductible under at-risk provisions ____________________
Adjusted basis at 12/31/17 ____________________
Suspended under at-risk provisions ____________________
FOR 2018
Deductible under at-risk provisions ____________________
Adjusted basis at 12/31/18 ____________________
Suspended under at-risk provisions ____________________
PASSIVE RULES ONLY
FOR 2017
Deductible under passive loss provisions ____________________
Suspended under passive loss provisions ____________________
FOR 2018
Deductible under passive loss provisions ____________________
Suspended under passive loss provisions ____________________
BONUS (apply both at risk and passive rules) (5 points)
FOR 2017
Deductible under at-risk provisions ____________________
Adjusted basis at 12/31/17 ____________________
Suspended under at-risk provisions ____________________
Deductible under passive loss provisions ____________________
Suspended under passive loss provisions ____________________
FOR 2018
Deductible under at-risk provisions ____________________
Adjusted basis at 12/31/18 ____________________
Suspended under at-risk provisions ____________________
Deductible under passive loss provisions ____________________
Suspended under passive loss provisions ____________________
QUESTION 4 (15 points)
In 2018 Zeus and Zilly made the following contributions to the following organizations.
Charity | Property | Cost | FMV | |
Goodwill | Clothes and misc. household items (several years old) | $9,700 | $2,350 | |
Historical Museum | Coin Collection | $12,500 | $89,700 | |
Zeus and Zilly’s best friend whose house burned down | Cash | $2,500 | $2,500 | |
UNICEF organization | Cash |
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver