Tax 650 Final Project Milestone One.docx - Tax 650 Final Project Milestone One 1 Tax 650 Final Project Milestone One Capital Gains and Taxation of Gross

Tax 650 Final Project Milestone One.docx - Tax 650 Final...

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Tax 650 Final Project Milestone One 1 Tax 650 Final Project Milestone One: Capital Gains and Taxation of Gross Income Client Review Marisa N. Kail-Kirk Southern New Hampshire University
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Tax 650 Final Project Milestone One 2 Abstract Bob Jones is age 60 and single, has recently retired from IBM. He has $690,000 available in his 401(k) fund and he is thinking of using that money to open a used car business that will be located at 210 Ocean View Drive in Pensacola, Florida. Bob has estimated that the business might make $300,000 in taxable income. Bob’s personal wealth including investments in land, stocks, and bonds is about $14,000,000. He reported an interest income of $20,000 and dividend income of $6,000 last year. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1966 for $450,000. Bob has hired your firm for professional advice regarding whether he should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. He is also considering transferring a possible 40% interest in his new business to his daughter Mandy, age 23 and single.
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Tax 650 Final Project Milestone One 3 Tax 650 Final Project Milestone One: Capital Gains and Taxation of Gross Income Client Review Bob Jones’ personal wealth including investments in land, stocks, and bonds is about $14,000,000. He reported an interest income of $20,000 and dividend income of $6,000 last year. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1966 for $450,000. Bob has hired our firm for professional advice regarding whether he should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. He is also considering transferring a possible 40% interest in his new business to his daughter Mandy, age 23 and single. Calculate the property disposition capital gains and taxation of gross income. Mr. Jones presented our firm with the notion that he has land worth $9,000,000 that he bought in 1966 for $450,000. In order to determine whether Bob has a capital gain or loss we must subtract the basis of the property ($450,000) from the value of the property ($9,000,000). After we do this, we can determine that Bob has a gain from the disposition of his property of $8,550,000. Disposable Property Capital Gains = $9, 000, 000- $450, 000 = $8, 550, 000 The following definition of long-term gain/loss and short-term gain/loss can help determine whether Mr. Jones had long-term or short-term gain.
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