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1) Jacob had the following transactions related to the land he owns and rents to a 3rd party: From 2/1 to 7/30, the rental income on Jacob's land was $40,050. Jacob had the tenant pay $20,025 to his son, Bob, and the rest of the $20,025 to himself. On 7/30/20, Jacob made a gift of his land to Bob. Jacob purchased this land in 2013 for $300,050. The fair market value of this land on 7/30/20 was $400,050. From 8/1 to 12/31, the rental income of $40,050 was all paid to Bob. On 10/1/20, Alex borrowed $120,050 from XYZ Bank and used the land he bought as security on the loan. . Part a) For tax purposes, how much rental income will Jacob report in 2020? Part b) How much rental income will Bob report in 2020? Part c) How much income will Bob recognize by receiving this land on 7/30/20? Part d) How much income will Alex recognize by borrowing $120,050 on 10/1/20? Part e) Assuming that Bob decides to sell the land on 3/1/21 to Hugh, who is an unrelated party. As part of the sale, Hugh pays Bob $300,050 in cash and gives Bob a convertible with a fair market value of $60,050. Calculate the gain or loss that Bob will recognize in 2020. Part f) Is the loss or gain long term or short term? Please show all your work. 2) Danny passed away on 08/15/20. The only person left alive was his daughter Candy and she received the following items in 2020 after the death of Danny: Cash inheritance of 200,100 Life insurance proceeds of $ 400,100 Inherited stock in Apple Corp. The FMV of the stock on date of Danny's death was $ 600,050. He bought this stock on 4/15/20 for $100,050. On 9/1/20 Candy got $ 6,050 of dividend income from Apple stock. The dividend was declared on 9/1/20 and paid on 10/1/20. On 3/1/21, Candy sold the Apple stock for $1,000,100 Part A. How much income will Barbara recognize for tax purposes in 2020 due to the above transactions? Part B. How much gain will Barbara recognize for tax purposes on selling this stock in 2021? Part C. Is this gain short term or long term? Please show all your work. 3) Ron is single and in 2020 has a taxable income of $480,000. This taxable income includes the following investment income: Interest income: 20,000 Qualified dividend income: 20,000 Nonqualified dividend income: 10,000 Short term capital gains: 25,000 Long term capital gains: 40,000 Calculate Ron's income tax liability for 2020 (round to whole dollar and do not add any additional taxes other than the income tax): a) $ 142,795 b) $ 136,723 c) $133,796 d) $ 132,723 e) $ 130,795 Please show all your work. 1) Jacob had the following transactions related to the land he owns and rents to a 3rd party: From 2/1 to 7/30, the rental income on Jacob's land was $40,050. Jacob had the tenant pay $20,025 to his son, Bob, and the rest of the $20,025 to himself. On 7/30/20, Jacob made a gift of his land to Bob. Jacob purchased this land in 2013 for $300,050. The fair market value of this land on 7/30/20 was $400,050. From 8/1 to 12/31, the rental income of $40,050 was all paid to Bob. On 10/1/20, Alex borrowed $120,050 from XYZ Bank and used the land he bought as security on the loan. . Part a) For tax purposes, how much rental income will Jacob report in 2020? Part b) How much rental income will Bob report in 2020? Part c) How much income will Bob recognize by receiving this land on 7/30/20? Part d) How much income will Alex recognize by borrowing $120,050 on 10/1/20? Part e) Assuming that Bob decides to sell the land on 3/1/21 to Hugh, who is an unrelated party. As part of the sale, Hugh pays Bob $300,050 in cash and gives Bob a convertible with a fair market value of $60,050. Calculate the gain or loss that Bob will recognize in 2020. Part f) Is the loss or gain long term or short term? Please show all your work. 2) Danny passed away on 08/15/20. The only person left alive was his daughter Candy and she received the following items in 2020 after the death of Danny: Cash inheritance of 200,100 Life insurance proceeds of $ 400,100 Inherited stock in Apple Corp. The FMV of the stock on date of Danny's death was $ 600,050. He bought this stock on 4/15/20 for $100,050. On 9/1/20 Candy got $ 6,050 of dividend income from Apple stock. The dividend was declared on 9/1/20 and paid on 10/1/20. On 3/1/21, Candy sold the Apple stock for $1,000,100 Part A. How much income will Barbara recognize for tax purposes in 2020 due to the above transactions? Part B. How much gain will Barbara recognize for tax purposes on selling this stock in 2021? Part C. Is this gain short term or long term? Please show all your work. 3) Ron is single and in 2020 has a taxable income of $480,000. This taxable income includes the following investment income: Interest income: 20,000 Qualified dividend income: 20,000 Nonqualified dividend income: 10,000 Short term capital gains: 25,000 Long term capital gains: 40,000 Calculate Ron's income tax liability for 2020 (round to whole dollar and do not add any additional taxes other than the income tax): a) $ 142,795 b) $ 136,723 c) $133,796 d) $ 132,723 e) $ 130,795 Please show all your work
