Joshua, age 16, bought a used car from a neighbor for $5,000 cash, itsfair market value. Three months later, Joshua crashed the car while highon marijuana. He had no insurance and the car is badly damaged. IfJoshua disaffirms the contract and returns the wrecked car, now worth $1,000, to the seller, in the majority of statesGroup of answer choiceshe will receive a full refund of $5,000.he will not receive anything.he will receive $2,500 (half of his money) back.he will receive $1,000.

When a minor (someone under 18 years old) enters into a contract, they generally have the right to…

Answered: Joshua, age 16, bought a used car from…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Michael has split - limit coverage equal to 50/100/25 on his vehicle. Yesterday, Michael rear ended a new Mercedes as he was driving to work. The damage to the other car totaled $33,000, while the medical bill for the other driver was $15,000. If Michael incurred $4,500 in damage to his own car, how much will Michael's insurance company pay him (without regard to the deductible) from his split - limit policy for the accident?
Martha sells her house to Sachin on November 1, 2010, for $480,000. On December 5, the property tax bill from the county is for $4,800, Sachin concludes that he owes only for the months of November and December and that the other $4,000 is Martha’s liability. On Schedule A of Form 1040 for 2010, Sachin deducts the $800 of property tax he paid. When Sachin tries to sell his house 18 months later, he discovers that the county has placed a lien on the property. In order to get a clear title, he pays the $4,000 of property taxes due. He subsequently sells his house for a recognized gain of $38,000. Sachin deducts the $4,000 of property taxes that relate to the period Martha owned the house of Schedule A of his 2012 tax returns. Has Sachin acted properly? Why or why not?
O Sebastian originally sold his home in an installment sale for $300,000. At the time, his adjusted basis in the home was $220,000. He qualified for the Section 121 principal residence exclusion, so his gain was not included in his taxable income for the year of sale. Three years later, he repossessed the home from the buyer when the balance of the note was $275,000. He spent $8,000 on improvements and resold it within the year for $320,000. What is Sebastian's recomputed adjusted basis in the property? $228,000 $258,000 $278,000 $308,000
Frank's Mini Mart sold a piece of equipment on an installment agreement, to a competitor on the other side of town. The other owner failed to make the payments and Frank had to repossess the equipment. What is Frank's gain or loss on repossessed personal property with a fair market value of $12,000 on the date of repossession, where the seller's basis in the installment obligation at the time of repossession is $7,500, and the costs of repossession were $500? (a) Loss of $500. (b) Gain of $4,000. (c) Gain of $4,500 (d) Gain of $5,000.
Rusty Reft, who lives in Territory 5, carries 10/20/5 compulsory liability insurance along with optional collision that has a $300 deductible. Rusty was at fault in an accident that caused $3,400 damage to the other auto and $1,100 damage to his own. Also, the courts awarded $14,800 and $7,200, respectively, to the two passengers in the other car for personal injuries. a. How much will the insurance company pay? Amount paid b. What is Rusty's share of the responsibility? Amount paid
In 2020, Susan (who files as single) had silverware worth $10,000 (basis $6,000) stolen from her home due to a federal declared disaster area. Her insurance company told her that her policy did not cover the theft. In 2020, Susan’s other itemized deductions were $2,000, and she had AGI of $40,000. In February 2021, Susan’s insurance company decided that Sarah’s policy did cover the theft of the silverware and they paid Susan $4,000. Determine the tax treatment of the $4,000 received by Susan during 2021. a. None of the $4,000 should be included in gross income. b. $2,000 should be included in gross income. c. $4,000 should be included in gross income. d. Last year’s return should be amended to include the $4,000.
Langstraat, age seventeen, owned a motorcycle that he insured against liability with Midwest Mutual Insurance Company. He signed a notice of rejection attached to the policy indicating that he did not desire to purchase uninsured motorists’ coverage from the insurance company. Later he was involved in an accident with another motorcycle owned and operated by a party who was uninsured. Langstraat now seeks to recover from the insurance company, asserting that his rejection was not a valid rejection because he is a minor. Can Langstraat recover from Midwest? Explain.
Tom accepted a written offer from Jill to build a house for Jill. Tom agreed to a price of $800,000. Two months into the construction, Tom realizes that he will barely make a profit on the deal. Tom informs Jill that he will not continue building her house unless Jill agrees to pay Tom an additional $200,000. Jill and Tom agree in writing that Jill will pay Tom an additional $200,000 to complete construction of the house. After Tom completes the construction of the house, Jill refuses to pay Tom the additional $200,000. Tom sues Jill alleging breach of contract with regard to the additional $200,000. Based on the facts stated in this questiona. None of the answers are correctb. Tom will win as long as he is not a minorc. Tom will lose because there was no contract for this $200,000.d. Jill will lose because there was a contract for this $200,000
Riley Company promises to pay Janet Anderson or her estate $150,000 per year for the next 10 years, even if she leaves the company or passes away to try to induce her to stay with the company. Riley Company wants to properly record this transaction as deferred compensation. Riley Company purchased a whole life insurance policy for Janet, naming the company as the beneficiary. Reed Company wants to determine if it can offset the cash surrender value of the life insurance policy against the deferred compensation liability.
Steve Drake sells a rental house on January 1, 2019, and receives $100,000 cash and a note for $50,000 at 7 percent interest. The purchaser also assumes the mortgage on the property of $25,000. Steve's original cost for the house was $170,000 on January 1, 2011 and accumulated depreciation was $27,000 on the date of sale. He collects only the $100,000 down payment in the year of sale. c. Assuming Steve collects $5,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized in that year under the installment sale method
Landlord leased her suburban ice cream parlor for three years at a rent of $2000 a month toBaskin. Six months later, Baskin transferred his interest in the lease to Herrell. One year later,Herrell transferred his interest in the lease to Ana. Now, none of the parties is paying the rent.Landlord wants to sue Herrell for the rent, "because he is the only one who can probably paythe rent that is due." In order to sue Herrell for the remaining rent, Landlady will have to prove:a-That the transfers from Baskin to Herrell, and from Herrell to Ana, both conveyed the fullremaining interest in the leasehold. b-That the transfer from Baskin to Herrell conveyed the full remaining interest in the lease leasehold, but the transfer from Herrell to Ana conveyed less than the full remaining interest in thec-That the transfer from Baskin to Herrell conveyed less than the full remaining interest in the leasehold, but the transfer from Herrell to Ana conveyed the full remaining interest in the lease. d-…
Jessica is a professional consultant. She agrees to consulting services for Joe for $2,000. After she finishes, Joe does not have cash to pay Jessica, but he has an antique, collectible baseball card with a fair market value of $2,000 that he gives her to satisfy the payment. The baseball card cost Joe $500. How much should Jessica include in her gross income?

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