In late 2008, Leticia invested $100,000 in TechCo, a startup high-tech venture. Althoughshe had great expectations of financial gain, TechCo's efforts were not well received in themarket, and the value of its stock plummeted. Four years ago when TechCo declaredbankruptcy, Leticia wrote off her $100,000 stock investment as worthless securities.To Leticia's surprise, this year she receives $40,000 from the bankruptcy trustee as a finalsettlement for her TechCo stock. Leticia now realizes that she probably should not haveclaimed the loss four years ago because the stock was not completely worthless.However, since the statute of limitations has passed, she does not plan to amend her taxreturn from four years ago. She also decides that the $40,000 is not income but is merely arecovery of some of her original investment. How do you react to Leticia's plans?

Leticia's situation involves the recovery of a previously written-off investment in TechCo, a…

Answered: In late 2008, Leticia invested $100,000…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 45P

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Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $25,000 for 1,200 shares of Malti Company’s common stock. She received a $1,032 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $24,000. Kathy would like to earn a return of at least 13% on all of her investments. She is not sure whether the Malti Company stock provided a 13% return and would like some help with the necessary computations. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 13% return?
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $27,000 for 1,010 shares of Malti Company's common stock. She received a $879 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $25,000. Kathy would like to earn a return of at least 7% on all of her investments. She is not sure whether the Malti Company stock provide a 7% return and would like some help with the necessary computations. Required: Compute the net present value that Kathy earned on her investment in Malti Company stock. Did the Malti Company stock provide a 7% return?
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $23,500 for 1,030 shares of Malti Company's common stock. She received a $917 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $21,000. Kathy would like to earn a return of at least 8% on all of her investments. She is not sure whether the Malti Company stock provided a 8% return and would like some help with the necessary computations. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 8% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value that Kathy earned on her investment in…
Sheila’s mother purchased 100 shares of Apple stock in 1992. The original sale price was $26 per share for a total value of $2,600. She kept those 100 stocks until her death in June 2022. By the time of her death, the Apple stock value is $190 per share for a total value of $19,000. Sheila will not owe taxes for capital gains on the $16,400 increase in value. Why do you think the gains and losses should be separated from sheila's other gains and losses?
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $23,000 for 500 shares of Malti Company's common stock. She received a $460 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $30,000. Kathy would like to earn a return of at least 13% on all of her investments. She is not sure whether the Malti Company stock provide a 13% return and would like some help with the necessary computations. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 13% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value that Kathy earned on her investment…
Sheldon put $500 into a certificate of deposit at his bank. In six months the value of the CD is $620. What is his ROI? Penny invested $10,000 into the stock market. She sold the stock two days later for $13,500. What is her ROI? Leonard bought a bond for $5,000 and sold it for $5,300 four years later. What is his ROI? Howard bought a house for $250,000 and sold it for $227,000 ten years later. What is his ROI? Raj bought a tractor for $25,000 and sold it for $32,000 one year later. What is his ROI? Amy put $50 in a savings account. A year later the balance on the account is $58. What is her ROI?
In the past several years, Shakira had loaned money to Shakira Incorporated (an S corporation) to help the corporation keep afloat in a downturn. Her stock basis in the S corporation is now $0, and she has deducted $42,750 in losses, reducing her debt basis from $142,500 to $99,750. Things appear to be turning around this year, and Shakira Incorporated repaid Shakira $28,500 of the $142,500 outstanding loan. What is Shakira's income, if any, on the partial loan repayment?
Anne earned emoluments as a marketing manager with Jabem Chocolate Ltd. Jablem did not have an ESOP plan. In 2008 as a member of the management team she was offered shares in jablem which she could purchase at 50%of their marketable value. She borrowed the money from her credit union and paid for the shares in full. In 2009 jablem paid a dividend which Anne brought to account in her annual return. In 2010 and 2013 Anne received no dividends in respect of the jablem shares. In filling her returns for these years, Anne claimed deductions for the interest paid on the money she had borrowed from her credit union. Discuss whether it is likely that the interest expense will be allowable by the commissioners in the years when no dividends were earned. In your answer make reference to Thwaites v CIT{Jamaica, 1973}; woodroffe v CIT (Grenada, 1966), wharf properties limited v commissioners of inland revenue (Hong Kong 1997).
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate ofreturn that she is earning. For example, three years ago she paid $13,000 for 200 shares of Malti Company’s common stock. She received a $420 cash dividend on the stock at the end of each year for three years.At the end of three years, she sold the stock for $16,000. Kathy would like to earn a return of at least 14%on all of her investments. She is not sure whether the Malti Company stock provided a 14% return andwould like some help with the necessary computations.Required:(Ignore income taxes.) Using the net present value method, determine whether or not the Malti Companystock provided a 14% return. Use the general format illustrated in Exhibit 12–2 and round all computationsto the nearest whole dollar.
Fiona purchased 200 shares of Oxygon stock for $11 a share on August 11, 2020. On July 28, 2021, the price had fallen to $8. Concerned that the price might decline further, Fiona sold all her shares that day. She later regretted this move, and on August 7, 2021, she repurchased the stock when it was $10 a share. What is Fiona's 2021 capital gain or loss on these transactions? No gain or loss will be reported. $100 short-term loss. $200 short-term loss. $300 short-term loss.
Donna currently owns a large position in Facebook. She originally purchased the stock at $39.50 per share. However, since the last presidential election, she has been concerned about the issues of privacy and risks associated with potential investigations that the company is exposed to. The stock is currently near the all-time high again. She is concerned about losing value because she is going on a two-week vacation and will not be able to initiate trades at that time. She would prefer to sell her stock if the price drops to $165.00. What type of trading strategy can she use to protect her gains? O Place a limit order to sell at $165 now. O Place a stop-loss order at $165 now. O Place a price alert to notify you when the stock trades near $165, so you can place a market order. O Place a price alert to notify you when the stock trades near $165, so you can place a limit order.
I have a client who is in his 70's. in 2020, he incurred significant capital losses in the amount of $65,000 because he sold some stocks when the stock market fell as a result of the pandemic. Because my client's losses are investment losses (and therefore capital), he can only deduct $3,000 per year against other income. With $65K in losses, it will take him more than 21 years to recover those losses. Since he is in his 70's, he may not live that long. What advice might you give him to use up those losses faster?

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