Trey is in the 32% tax bracket. He acquired 4,000 shares of stock in Midlands Corporation ten years ago at a cost of $80 per share. In the current year, Trey received a payment of $175,000 from Midlands Corporation in exchange for 1,200 of his shares in Midlands. Midlands has E & P of $160,000. Trey has a capital loss carryover of $50,000 the current tax year. Assume that Trey has no capital losses and taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%. What amount of the capital loss may Trey deduct in the current year in the following situations? a. The $175,000 payment from Midlands Corporation is a qualifying stock redemption for tax purposes. Trey may use 4,350 ✔ Feedback ✓ Check My Work 50,000 ✓of the capital loss carryover to offset the gain on the redemption. His income tax liability is Noncorporate shareholders generally prefer to have a stock redemption treated as a sale or exchange rather than as a dividend distribution. b. The $175,000 payment from Midlands Corporation does not qualify as a stock redemption for tax purposes. Trey could deduct $ 3,000 ✓of the $50,000 capital loss carryover. His income tax liability is $ Foodbook 47,000 X.

Trey is in the 32% tax bracket. He acquired 4,000 shares of stock in Midlands Corporation ten years ago at a cost of $80 per share. In the current year, Trey received a payment of $175,000 from Midlands Corporation in exchange for 1,200 of his shares in Midlands. Midlands has E & P of $160,000. Trey has a capital loss carryover of $50,000 the current tax year. Assume that Trey has no capital losses and taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%. What amount of the capital loss may Trey deduct in the current year in the following situations? a. The $175,000 payment from Midlands Corporation is a qualifying stock redemption for tax purposes. Trey may use 4,350 ✔ Feedback ✓ Check My Work 50,000 ✓of the capital loss carryover to offset the gain on the redemption. His income tax liability is Noncorporate shareholders generally prefer to have a stock redemption treated as a sale or exchange rather than as a dividend distribution. b. The $175,000 payment from Midlands Corporation does not qualify as a stock redemption for tax purposes. Trey could deduct $ 3,000 ✓of the $50,000 capital loss carryover. His income tax liability is $ Foodbook 47,000 X.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On this question may you please explain how it came to 41880 instead of 41860
Sh6 Please help me Thankyou
What Is Section 1031? A brief explanation on this?
Other than 1040, what other forms need to be completed?
E14.7
E14.2
E10.15
12-10
Explain IAS39
E12.18
That is not a possible solution. The possible anwsers are --> a. 122329.9877 b. 127159.8450 c. 122132.1253 d. 126907.4914 Please explain
Sh11