ACCT 612 help A Guide to career/Snaptutorial ACCT 612 help A Guide to career/Snaptutorial | Page 3

$10,000 that is expected to increase at an annual pre- tax rate of 4
percent. The taxpayer expects to hold the bond and the land for 10
years and expects to pay capital gains taxes of 20 percent when the
land is sold. The taxpayer’s marginal tax rate on ordinary income is
expected to be 25 percent throughout the 10- year period.
Greg Jones lives in New York City and has the opportunity to rent his
condominium during the 2010 Olympic Games. He has two offers—
one to rent for 10 days at $500 per day and the other to rent for 16
days at $400 per day. Rental expenses will be negligible. What is your
advice to Greg?
Paris Corporation holds a $100,000 unrealized net capital gain and a
capital loss carryforward that will expire in the current year. Should
Paris accelerate the recognition of this gain from next year to this
year, assuming a net capital loss carryforward in each of the following
amounts? Paris is subject to a 14 percent cost of capital. Its marginal
tax rate is 40 percent.
$40,000
$10,000
Repeat parts a and b, but assume that Paris is subject to a 6 percent
cost of capital.
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