Financial Accounting Rachel, a single taxpayer, bought her home in Santa Monica 20 years ago for$80,000. She has lived continuously in the home since she purchased it. Inthe current year, she sells her home for $460,000.What is Rachel's taxable gain on the sale?a. $130,000b. $150,000c. $380,000d. $0

Step 1: Definition of Home Sale Exclusion (Section 121 Exclusion)The Home Sale Exclusion, also known…

Answered: Rachel, a single taxpayer, bought her…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 16MCQ

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Chelsea, who is single, purchases land for investment purposes in 2014 at a cost of 22,000. In 2019, she sells the land for 38,000. Chelseas taxable income without considering the land sale is 100,000. What is the effect of the sale of the land on her taxable income, and what is her tax liability?
Leroy and Amanda are married and have three dependent children. During the current year, they have the following income and expenses: Salaries 120,000 Interest income 45,000 Royalty income 27,000 Deductions for AGI 3,000 Deductions from AGI 9,000 a. What is Leroy and Amandas current year taxable income and income tax liability? b. Leroy and Amanda would like to lower their income tax. How much income tax will they save if they validly transfer 5,000 of the interest income to each of their children? Assume that the children have no other income and that they are entitled to a 1,050 standard deduction.
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Rachel, a single taxpayer, bought her home in Santa Monica 20 years ago for $80,000. She has lived continuously in the home since she purchased it. In the current year, she sells her home for $460,000. What is Rachel's taxable gain on the sale? a. $130,000 b. $150,000 c. $380,000 d. $0