Bonnie paid $9,200 for corporate bonds that have a par value of $10,000 and a coupon rate of 8.6 percent, payable quarterly. Bonnie received her first interest payment after holding the bonds for three months and then sold the bonds for $9,421. Part 2 If Bonnie is in a 33 percent marginal tax bracket for federal income tax purposes, what are the

Bonnie paid $9,200 for corporate bonds that have a par value of $10,000 and a coupon rate of 8.6 percent, payable quarterly. Bonnie received her first interest payment after holding the bonds for three months and then sold the bonds for $9,421. Part 2 If Bonnie is in a 33 percent marginal tax bracket for federal income tax purposes, what are the

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter14: Property Transactions: Determination Of Gain Or Loss And Basis Considerations

Section: Chapter Questions

Problem 2DQ

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Determine the taxpayers gross income for tax purposes in each of the following situations: a. Deb, a cash basis taxpayer, traded a corporate bond with accrued interest of 300 for corporate stock with a fair market value of 12,000 at the time of the exchange. Debs cost of the bond was 10,000. The value of the stock had decreased to 11,000 by the end of the year. b. Deb needed 10,000 to make a down payment on her house. She instructed her broker to sell some stock to raise the 10,000. Debs cost of the stock was 3,000. Based on her brokers advice, instead of selling the stock, she borrowed the 10,000 using the stock as collateral for the debt. c. Debs boss gave her two tickets to the Rabid Rabbits rock concert because she met her sales quota. At the time she received the tickets, each ticket had a face price of 200 and was selling on eBay for 300. On the date of the concert, the tickets were selling for 250 each. Deb and her son attended the concert.
Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2019 gross income: a. On September 30, 2019, she cashed in Series EE bonds for 10,000. She purchased the bonds in 2009 for 7,090. The yield to maturity on the bonds was 3.5%. b. On July 1, 2018, she purchased a CD for 10,000. The CD matures on June 30, 2020, and will pay 10,816, thus yielding a 4% annual return. c. On July 1, 2019, she purchased a CD for 10,000. The maturity date on the CD was June 30, 2020, when Marlene would receive 10,300.
Lana Long, age 32, chief executive officer of News America borrows $100,000 from her employer as a bridge loan. Assume that the applicable federal rate for year one of the loan is 6 per cent, but that American only charges 2 percent. What are the likely tax consequences for Lana? Explain.
Dana intends to invest $66,000 in either a Treasury bond or a corporate bond. The treasury bond yields 5 percent before tax, and the corporate bond yields 6 percent before tax. Assume Dana's federal marginal rate is 24 percent and she itemizes deductions. a-2. How much interest after-tax would Dana earn by investing in the corporate bond? b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?
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Data: Heather reported $6,200 of interest income from corporate bonds she received as gifts from her father over the last several years. This was Heather’s only source of income for the year. Heather made $1,000 of estimated tax payments during the year. Question: Determine Heather’s federal income taxes due or payable Thx
Anastasia wants to invest $1.5M. Based on her income she is currently in the 33% tax bracket for ordinary income and in the 15% bracket for long-term capital gains. Her tax brackets for state income tax purposes are 7% and 0% on long-term capital gains. Consider the following situations: Situation 2 Situation 2 Corporate Municipal Type Bonds Bonds Time horizon 5 years 7 years 11% interest 6.5% interest Income annually annually Discount rate 5.5% 5% Repayment/Sale Repaid after 5 Repaid after years 7 years Taxable at Not taxable for federal ordinary Comments income tax rates; no state income tax but state income tax of 7% applies income tax Requirements: Determine the net present value of the after-tax cash flow for: (1) Situation 1: (2) Situation 2:
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