LO.1, 4 The taxpayer is an antiques collector and is going to sell an antique purchased many

Question:

LO.1, 4 The taxpayer is an antiques collector and is going to sell an antique purchased many years ago for a large gain. The facts and circumstances indicate that the taxpayer might be classified as a dealer rather than an investor in antiques. The taxpayer will save

$40,000 in taxes if the gain is treated as long-term capital gain rather than as ordinary income. The taxpayer is considering the following options as ways to assure the $40,000 tax savings.

l Give the antique to his daughter, who is an investment banker, to sell.

l Merely assume that he has held the antique as an investment.

l Exchange the antique in a like-kind exchange for another antique he wants.

One of the tax preparers the taxpayer has contacted has said he would be willing to prepare the return under the second option. Would you? Why? Evaluate the other options.

COMMUNICATIONS

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

South Western Federal Taxation 2011 Taxation Of Business Entities

ISBN: 9780538498616

14th Edition

Authors: James E. Smith, William A. Raabe, David M. Maloney

Question Posted: