As a political consultant for an aspiring politician , you have been hired to evaluate thefollowing statements that pertain to capital gains and losses . Evaluate the statement andprovide at least a oneparagraph explanation of each statement . As you prepare youranswer , consider the fact that the aspiring politician does not have much knowledgeabout taxation .
� a . The tax on capital gains is considered a voluntary tax .
� b . On October 22 , 1986 , the Tax Reform Act of 1986 was passed , which eliminated the60 % of net capital gain deduction ( i . e ., an individual taxpayer with $ 10,000 of netcapital gain was entitled to a $ 6,000 deduction when computing AGI ) before January1 , 1987 . Many state governments enjoyed a substantial increase in 1986 tax revenue .
� c . High-income taxpayers receive the most benefit from preferential treatment for capitalgains . Comprehensive Problem I5-61 Betty incurs the following transactions during the current year . Without considering thetransactions , her 2006 AGI is $ 40,000 . Analyze the transactions and answer the follow-ing questions :
• On March 10 , 2006 , she sells a painting for $ 2,000 . Betty is the artist , and she com-pleted the painting in 2001 . Her basis for the painting is $ 50 .
• On June 18 , 2006 , she receives $ 28,500 from the sale of stock purchased by her unclein 1996 for $ 10,000 , which she inherits on February 20 , 2006 , as a result of heruncle ’ s death . The stock ’ s FMV on that date is $ 30,000 .
• On July 30 , 2006 , she sells land for $ 25,000 that was received as a gift from herbrother on April 8 , 2006 , when the land ’ s FMV was $ 30,000 . Her brother purchasedthe land for $ 43,000 on October 12 , 1998 . No gift tax was paid .
� a . What is her NSTCL or NSTCG ?
� b . What is her NLTCL or NLTCG ?
� c . What is the effect of capital gains and losses on her AGI ? d . What is her capital loss carryforward to 2007 ? ===================================================