ACC 547 Week 2 Problem Set I5-67 , I5-61
ACC 547 Week 2 Problem Set I5-67 , I5-61
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Week 2 Case Study I5-67 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