Tax effects of alternate methods of transferring

Assignment Help Accounting Basics

Reference no: EM13972711

Marlo and Merlin's son, Alex, needs $20,000 to start a business. They have $30,000 in securities that they can use to give him the capital he needs. Pertinent information regarding the securities is given below:

	Fair Market Value	Basis	Purchase Date
Security A	$10,000	$ 7,000	2/10/07
Security B	$10,000	$ 5,000	2/14/04
Security C	$10,000	$14,000	3/19/03

Marlo and Merlin are in the 28% marginal tax rate bracket; Alex is in the 15% marginal tax rate bracket. Neither Marlo, Merlin, nor Alex has any other capital asset transactions during the year. Alex's basis in any of the securities gifted to him will be the lesser of his parents' basis or the fair market value of the security. Discuss the tax effects of alternate methods of transferring $20,000 to Alex, and devise an optimal plan for making the transfer.

Reference no: EM13972711

Questions Cloud

Write a research paper that examines crime scene management : Write a research paper that examines crime scene management. Compare and contrast problems that may occur if inaccurate data collection or analysis is performed by a forensic science professional at a crime scene.

Key components within a performance management plan : What do you think are the key components within a performance management plan? Which component is the most challenging to implement? Why? Should evaluators have the ability to easily quantify key performance indicators in an objective format from ..

Compute the payback period net present value : Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a required rate of return of 14%. (10 points)

How should training effectiveness be measured : How should training effectiveness be measured in an organization? What methods would you recommend for your current organization? Explain your reasons. If your organization provided tuition assistance so you could take this class, how would you re..

Tax effects of alternate methods of transferring : Alex's basis in any of the securities gifted to him will be the lesser of his parents' basis or the fair market value of the security. Discuss the tax effects of alternate methods of transferring $20,000 to Alex, and devise an optimal plan for mak..

Payment of unreimbursed medical expenses : Company B-Annual salary of $46,000, a cafeteria plan under which employees can choose benefits of up to 10% of annual salary or take the cash equivalent. In addition, the company has a flexible benefits plan in which employees may par- ticipate by..

Direct labor is paid in the month incurred. : Direct materials are paid 25% in the month incurred and 75% in the following month. Account payable for materials as of December 31, 2010 is $5,400; this amount will be paid in January 2011.

What was the best strategy for making wildtype flies : What strategies do you plan to use to make wildtype flies? What percentage of the class do you anticipate will be wildtype at the end? Eyeless? Curly?

Complete the recruitment and selection strategies : Complete the Recruitment and Selection Strategies Recommendations task, as described in the Email from Traci, located on the Atwood and Allen Consulting page

User Account

All Pages