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Week 4 Assignment
Please complete the below problems and submit your answers in the Week 4 Drop Box. See “Syllabus/Due Dates for Assignments & Exams” for due date information.
1.1.Nancy gave her grandson, Sean, twenty acres of land.Her tax basis in the land was $25,000. Nancy’s marginal tax rate for the current year is 45%; her grandson’s is 25%.Its fair market value was $575,000 at the date of the transfer. If the gift tax rate is 40% and she has never made a gift in excess of $10,000 before this, what amount of gift tax will she pay? What is their net tax savings percentage as a family unit if Sean sells the land?
2.2.Tom and Judy Bell, who file jointly, collected $6,000 of Social Security benefits, $18,000 in fully taxable pension payments and $10,000 of tax-exempt interest.How much of their Social Security is included in gross income? How would this change if they had received $20,000 in tax-exempt interest?