Problem 7-36 (LO. 2, 8)

Mary, a single taxpayer, purchased 10,000 shares of 1244 stock several years ago at a cost of $20 per share. In November of the current year, Mary received an offer to sell the stock for $12 per share. She has the option of either selling all of the stock now or selling half of the stock now and half of the stock in January of next year. Mary will receive a salary of $80,000 for the current year and $90,000 next year. Mary will have long-term capital gains of $8,000 for the current year and $10,000 next year.

If Mary's goal is to minimize her AGI for the two years, determine whether she should sell all of her stock this year or half of her stock this year and half next year.

a. The loss on the sale of Mary's 1244 stock is treated as an ordinary loss. This treatment for taxpayers filing as single is limited to $ per year.

b. Determine Mary's total AGI under both options for the current year and next year.

If an amount is zero, enter "0".

Sell all of the stock this year:
Current year's AGI
Salary		$80,000
Ordinary loss		$
Long-term capital gain	$8,000
Less: long-term capital loss	$
Equals: net long-term capital loss	$
Deductible net long-term capital loss		$
Adjusted gross income		$
Net long-term capital loss carryover	$
Next year's AGI
Salary		$90,000
Long-term capital gain	$10,000
Less: net long-term capital loss carryover	$
Equals: net long-term capital loss (before limitation)	$
Deductible net long-term capital loss		$
Adjusted gross income		$
Total AGI
Current year		$
Next year
Total		$
Sell half of the stock this year and half next year:
Current year's AGI
Salary		$80,000
Ordinary loss		$
Long-term capital gain	$8,000
Less: no capital loss	$
Equals: net long-term capital gain	$
Taxable net long-term capital gain		$
Adjusted gross income		$
Next year's AGI
Salary		$90,000
Ordinary loss		$
Long-term capital gain	$10,000
Less: no capital loss	$
Taxable net long-term capital gain		$
Adjusted gross income		$
Total AGI
Current year		$
Next year
Total		$

Problem 7-36 (LO. 2, 8)