Reference no: EM133144070

Question 1 - Jane Herbert acquired a house in 2016 for $300,000. In 2018 she acquired a cottage for $150,000. She lived in the house in the winter and in the cottage in the summer. In 2020 she sold both properties. She received $400,000 for the house and $250,000 for the cottage. Determine the minimum taxable capital gain to be reported by Jane on the sale of the two properties.

Question 2 - What are the tax consequences if an individual sells the property to his or her spouse at a price that is less than the property's market value but more than its cost?

Question 3 - What are the tax consequences if a parent sells the property to a child at a price that is less than the actual value of the property? What difference would it make if the property were simply gifted to the child?

Question 4 - Early in the current year, Alex Manuel gifted shares of a public corporation to his 16-year-old son. Alex had paid $1,000 for the shares. They were worth $15,000 at the time of the gift. After receiving the gift, his son received dividends of $800 on the shares. Also, in the current year, Alex sold shares of a public corporation to his spouse. The shares, which had a value of $10,000 at the time of the sale, originally cost $2,000. Alex sold them to his spouse for $7,000. His spouse received dividends of $500 on these shares. Please determine the tax consequences of these transactions.