a. What is the amount of Reya's AMT adjustment in 2021? What is her recognized gain on the sale for regular tax and for AMT purposes in 2023? In 2021, Reya has a positive income tax is $ 150,000 adjustment of $ AMT adjustment of 60,000. Her recognized gain on the sale for regular 150,000 for AMT purposes. As a result, Reya has a positive AMT and $ in 2023. b. How would your answers in (a) change if Reya had sold the stock in 2021 rather than 2023? Reya would have a s recognize $ AMT adjustment is required in 2021. For regular tax purposes, Liza would income and a $ short-term capital gain. of ordinary/compensation

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.