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Estate Finance Family Tax Plan Questions

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Estate Finance Family Tax Plan Questions -

Q1. Larry gives Jeff 1 share of David, Inc. stock on January 2, 2002 that has a basis of $10,000. On January 2, 2002, 1 share of David Inc. stock has a fair market value of $100,000. On January 2, 2004, Jeff sells the share to Leon for $200,000. How much income or loss does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

Q2. Larry gives Jeff 1 share of David, Inc. stock on January 2, 2002 that has a basis of $200,000. On January 2, 2002, 1 share of David Inc. stock has a fair market value of $100,000. On January 2, 2004, Jeff sells the share to Leon for $150,000. How much income or loss does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

Q3. Larry gives Jeff 1 share of David, Inc. stock on January 2, 2002 that has a basis of $200,000. On January 2, 2002, 1 share of David Inc. stock has a fair market value of $100,000. On January 2, 2004, Jeff sells the share to Leon for $90,000. How much income or loss does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

Q4. Larry gives Jeff 1 share of David, Inc. stock on January 2, 2002 that has a basis of $200,000. On January 2, 2002, 1 share of David Inc. stock has a fair market value of $100,000. On January 2, 2004, Jeff sells the share to Leon for $210,000. How much income does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

Q5. Larry dies on January 2, 2002 and bequeaths 1 share of David Inc. stock to Jeff that has a basis of $100,000. On January 2, 2002, 1 share of David Inc. stock has a fair market value of $1 million. On January 2, 2004, Jeff sells the share to Leon for $2 million. How much income does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

Q6. Larry dies on January 2, 2002 and bequeaths 1 share of David Inc. stock to Jeff that has a basis of $500,000. On January 2, 2002, 1 of share David Inc. stock has a fair market value of $100,000. On January 2, 2004, Jeff sells the share to Leon for $1 million. How much income does Jeff recognize on the sale? Analyze what Jeff's basis is in the stock and why.

Q7. On January 2, 2019, Larry created a trust with Leon as trustee. The trustee may at his discretion distribute principal and income to Susie for her health, education, maintenance and support. On January 10, 2019, Larry contributed 1 share of David Inc. stock to the trust. On January 10, 2019, 1 share of David, Inc. stock had a fair market value of $5000. Based on the terms of the trust, Susie had the right to withdraw Larry's contribution to the trust on the date of the contribution. Her right to withdraw the trust asset expired at the end of 2019. On January 2, 2021, the trust sold the share to Susie for $10,000. In 2021, how much income is reported by the trust, how much is reported by Larry and how much is reported by Susie and why? Assume for the purposes of the question that the trust is not at any point a grantor trust as to Larry (hint hint) under Section 671.

Reference no: EM132492556

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