Rich Uncle died on May 15, 2020, leaving you his mansion. Here are some additional facts: It was worth exactly $4.0 million on May 15, 2020. Exactly six months later (November 15, 2020) it was worth exactly $4.1 million. It was worth exactly $4.2 million on February 15, 2021, the day on which you finally received the deed to the mansion from Uncle’s executor. Uncle’s executor elected the alternate valuation date. You sold the mansion today for exactly $4.5 million cash. As a result of today’s sale, what will you report on your 2021 tax return relating to the receipt and/or sale of the mansion, and why? (a) $500,000 short-term capital gain. (b) $500,000 long-term capital gain. (c) $400,000 short-term capital gain. (d) $400,000 long-term capital gain. (e) $300,000 short-term capital gain. (f) $300,000 long-term capital gain. (g) $0.
Rich Uncle died on May 15, 2020, leaving you his mansion. Here are some additional facts: It was worth exactly $4.0 million on May 15, 2020. Exactly six months later (November 15, 2020) it was worth exactly $4.1 million. It was worth exactly $4.2 million on February 15, 2021, the day on which you finally received the deed to the mansion from Uncle’s executor. Uncle’s executor elected the alternate valuation date. You sold the mansion today for exactly $4.5 million cash. As a result of today’s sale, what will you report on your 2021 tax return relating to the receipt and/or sale of the mansion, and why? (a) $500,000 short-term capital gain. (b) $500,000 long-term capital gain. (c) $400,000 short-term capital gain. (d) $400,000 long-term capital gain. (e) $300,000 short-term capital gain. (f) $300,000 long-term capital gain. (g) $0.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(1) Rich Uncle died on May 15, 2020, leaving you his mansion. Here are some additional facts:
- It was worth exactly $4.0 million on May 15, 2020.
- Exactly six months later (November 15, 2020) it was worth exactly $4.1 million.
- It was worth exactly $4.2 million on February 15, 2021, the day on which you finally received the deed to the mansion from Uncle’s executor.
- Uncle’s executor elected the alternate valuation date.
- You sold the mansion today for exactly $4.5 million cash.
As a result of today’s sale, what will you report on your 2021 tax return relating to the receipt and/or sale of the mansion, and why?
(a) $500,000 short-term
(b) $500,000 long-term capital gain.
(c) $400,000 short-term capital gain.
(d) $400,000 long-term capital gain.
(e) $300,000 short-term capital gain.
(f) $300,000 long-term capital gain.
(g) $0.
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