(Stock repurchase and taxes) The Barryman Drilling Company is planning on repurchasing $1.08 million worth of the company's 450,000 shares of stock, which is currently trading at a price of $10.83 per share.Stan Barryman is the founder of the company and still holds 19,000 shares of company stock that he originally purchased for $8.32 per share. If Stan decides to sell 2,100 of his shares for $10.83 a share, what will behis after-tax proceeds where capital gains are taxed at 15 percent?Stan's after-tax proceeds from the sale are $. (Round to the nearest dollar.)

Capital gains on the sale of asset held for more than a year is the difference in the value of the…

Answered: (Stock repurchase and taxes) The…

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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Sam owns 1,500 shares of Eagle, Inc. stock that he purchased over 10 years ago for $80,000. Although the stock has a current market value of $52,000, Sam still views the stock as a solid long-term investment. He has sold other stock during the year with overall gains of $30,000, so he would like to sell the Eagle stock and offset the $28,000 loss against these gains—but somehow keep his Eagle investment. He has devised a plan to keep his Eagle investment by using funds in his traditional IRA to purchase 1,500 Eagle shares immediately after selling the shares he currently owns. Evaluate Sam’s treatment of these stock transactions. Can his plan work?
Robert has recently decided to open his new business of retail of products for petcare in a store located in the center of Barcelona. During the month of May 2021, Robert’s new company 4PETS, Ltd. realized the following transaction: 3 of May: 4PETS, Ltd. issued to Robert 200,000 shares in exchange of $200,000 of share capital 3th of May: 4PETS, Ltd purchased a shop next to the cathedral for $300,000. The price of the land is $150,000. Robert paid $80,000 in cash and issued a note payable for the remaining part. 4th of May: 4PETS, Ltd purchased furniture to FURNITURES4ALL, Inc. for $35,000. 4PETS, Ltd paid $20,000 in cash, the remaining $15,000 will have to be paid the 29th of May. 5th of May: 4PETS, Ltd purchased merchandises on account to ALLANIMALS, Inc for $53,000 6th of May: 4PETS, Ltd makes some installations in the shop for $8,500 paid in cash 7th of May: 4PETS, Ltd hires one employee with a salary $1,500/ month. Salaries are paid on the following day 2 of each month. 16 of…
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On May 2, 2015, Barney formed ABC Corporation contributing $200,000 in exchange for 100 percent of its stock. The corporation uses the funds to purchase a parcel of land. By April 14, 2020, the land had appreciated in value to $1,550,000. What are the tax consequences to ABC and Barney if the corporation sells the land and then liquidates? On May 2, 2014, Barney formed ABC Corporation contributing $200,000 in exchange for 100 percent of its stock. The corporation uses the funds to purchase a parcel of land. By April 14, 2020, the land had appreciated in value to $1,550,000. On December 12, 2017, he contributed Property #1 valued at $700,000 to ABC, receiving back additional ABC stock. Barney and ABC agreed to reduce the basis of Barney's stock in lieu of reducing ABC's basis in Property #1. Barney had purchased Property #1 in 2014 for $1,750,000. What are the tax consequences to ABC and Barney if, on April 14, 2020, the sells the land for $1,550,000 and Property #1 for $325,000 and…
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In 2016 (year 0), Jessee exercised a stock option by paying $100 per share for 225 shares of ABC stock. The market price at date of exercise was $312 per share. In 2023, Jessee sold the 225 shares for $480 per share. Assuming that Jessee is in the 35 percent tax bracket, has a 15 percent capital gains rate, and uses a 6 percent discount rate, compute the 2016 NPV of the cash flows from the exercise and sale if: (Use Appendix A). Required: a. The stock option was nonqualified. b. The stock option was an ISO. Complete this question by entering your answers in the tabs below. Required A Required B Compute the 2016 NPV of the cash flows from the exercise and sale if the stock option was nonqualified. Note: Round your intermediate calculations to the nearest whole dollar amount. NPV

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