Phoebe, who files single, holds several crypto wallets with large account balances. Her adjusted gross income (AGI) is expected to be around $475,000. If she decides to sell off some holdings, which of the following techniques can she use to lessen her tax impact? Explain with details

Phoebe, who files single, holds several crypto wallets with large account balances. Her adjusted gross income (AGI) is expected to be around $475,000. If she decides to sell off some holdings, which of the following techniques can she use to lessen her tax impact? Explain with details

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter6: Deductions And Losses: In General

Section: Chapter Questions

Problem 40P

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Phoebe, who files single, holds several crypto wallets with large account balances. Her adjusted gross income (AGI) is expected to be around $475,000. If she decides to sell off some holdings, which of the following techniques can she use to lessen her tax impact? Since the market always rises, she can sell first-in, first-out and will always be selling the lowest basis coins first. If she reinvests her proceeds in a Qualified Opportunity Fund within 180 days, she may defer paying any tax on her gains. This will enable her to spread the tax impact over several years. By selling her short-term holdings, she will avoid capital gains, and she can pay ordinary income rates on the gains. Each wallet is treated as a separate business entity. She can sell a little from each and it won't impact her taxes at all.
Suppose you are28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. Which of the following strategies is most tax efficient for your situation? ______ a.Invest all your income inside your regular taxable investment account. b.First, fully fund your 401 (k) account, then invest the rest in the IRA and Roth IRA account, finally invest the remaining money, if any,in your regular taxable investment account. c.Fully fund your 401 (k) account, and then invest all the rest money in your regular taxable investment account. d.First, fully fund your IRA and Roth IRA account, then fund your401 (k) account, finally invest the remaining money, if any, in your regular taxable investment account.
In each of the following problems, identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify. Binh met Anika 10 years ago at a cocktail party. Anika was a wealthy investor with extensive holdings in the oil and gas industry. Binh was a real estate agent earning about 35,000 a year. Several months later, Binh proposed marriage and Anika accepted. Just before the wedding, Anika told Binh that she had a mental hangup about marriage, and Binh agreed to live with her without being married. In return, Anika promised to leave Binh her entire estate. In the ensuing years, they had an intimate, marriage-like relationship, attending social, business, and family functions together. Anika died in 2015. No will was found immediately. A few months after Anikas death, her sister found a one-page paper signed by Anika. The paper left Anikas entire estate to her brothers and sisters and named her sister as executor of the estate. Binh sued Anikas estate and won a judgment of 2 million for services rendered to Anika during their relationship. The estate appealed the decision, which was affirmed as to liability but reversed and remanded for a new trial on the amount of the judgment. Binh and the estate subsequently worked out an agreement in which the estate paid Binh 1.2 million to settle his claim.
In each of the following problems, identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify. Thans grandmother dies and leaves him jewelry worth 40,000. In addition, he is the beneficiary of a 100,000 life insurance policy that his grandmother had bought before she retired.