Problem 6-39 (LO. 1) Julio Gonzales is in the 32% tax bracket. He acquired 2,000 shares of stock in Gray Corporation seven years ago at a cost of $50 per share. In the current year, Julio received a payment of $150,000 from Gray Corporation in exchange for 1,000 of his shares in Gray. Gray has E & P of $1,000,000. What income tax liability would Julio incur on the $150,000 payment in each of the following situations? Assume that Julio has no capital losses and taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%. a. The stock redemption qualifies for sale or exchange treatment. Julio has of $ . Julio's tax liability would be $ b. The stock redemption does not qualify for sale or exchange treatment. Julio has of $ - Julio's tax liability would be $ c. For part (b), prepare Julio's Schedule B (Form 1040) to reflect the tax reporting required of the transaction. SCHEDULE B OMB No. 1545-0074 (Form 1040) Interest and Ordinary Dividends 2020 Department of the Treasury Go to www.irs.gov/Schedule for instructions and the latest information. Attachment Internal Revenue Service (99) Attach to Form 1040 or 1040-SR. Sequence No. 08 Name(s) shown on return Your social security number Julio Gonzales 123-45-6789 Part I 1 List name of payer. If any interest is from a seller-financed mortgage and the Amount buyer used the property as a personal residence, see the instructions and list this Interest interest first. Also, show that buyer's social security number and address (See instructions and the instructions for Form 1040 and 1040-SR, line 2b.) 1 Note: If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 2 N 3 3 Add the amounts on line 1 Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach Form 8815 ...... 4 Subtract line 3 from line 2. Enter the result here and on Form 1040 or 1040-SR, line 2b ...... Note: If line 4 is over $1,500, you must complete Part III. 4 Amount Part II 5 List name of payer Gray Corporation Ordinary Dividends (See instructions and the instructions for Form 1040 and 1040-SR, line 3b.) 5 Note: If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. 6 Add the amounts on line 5. Enter the total here and on Form 1040 or 1040-SR, line 3b ... 6 Note: If line 6 is over $1,500, you must complete Part III. No Part III You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign Yes Foreign trust. Accounts 7a At any time during 2020, did you have a financial interest in or signature authority over a financial and Trusts account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions. Caution: If required, failure to If "Yes," are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts file FinCEN Form 114 (FBAR), to report that financial interest or signature authority? See FinCEN Form 114 and its may result in instructions for filing requirements and exceptions to those requirements .... substantial penalties. If you are required to file FinCEN Form 114, enter the name of the foreign country where the See instructions. financial account is located 8 During 2020, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If "Yes," you may have to file Form 3520. See instructions... For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 17146N Schedule B (Form 1040) 2020 b