Why does tax law allow taxpayers to use this special method

Assignment Help Financial Accounting

Reference no: EM131288208

Topic 1: Basis of Gifts

How do the rules work for determining the basis of gifts? Let me tell you a story: Years ago, I had a client who was very wealthy, with several million dollars of stock, all of which had a very low basis. She was going to give $10,000 of stock to each of her nephews and nieces. In each case the $10,000 of stock had a basis of only about $200. She asked me "Will they have taxable income on the gift?" I told her no, gifts are not taxable. The next April, she called me and yelled at me. She said they had each sold the stock and had huge taxable gains. I told her, "Of course, but that was not a gain on the "gift", that was a gain on the sale of the stock, which was another transaction." She told me "What did you think they were going to do with those stock shares, wallpaper their bathrooms with them?" Anyway, although my advice was technically correct, it was not very practical. I should have advised her about the results of a subsequent sale.

Topic 2: MACRS vs. Financial Depreciation Methods

How would you compare the MACRS method for personal property to non-tax financial depreciation? Describe the MACRS system for personal property in terms of both (1) Recovery Period and (2) Depreciation method used. Why is MACRS less "realistic"? Also, why does the tax law allow taxpayers to use this special method?

Reference no: EM131288208

Questions Cloud

Calculate the cost of equity and the weighted average cost : Calculate the cost of equity and the weighted average cost of capital for the company. Assume that the cost of bond is 4% and the debt ratio is 30%.

Messy realities of leadership : Based on whating the video, how can leaders deal with the messy realities of leadership? How can the conflicts and contradictions of leadership be resolved?(350~450 words)

Baseline measure for sustainable cash flow from operations : What would be an appropriate baseline measure for sustainable cash flow from operations, given past performance, ratios need to be done, and information in 10-K needs to be read?

How can you create a culture of your company : If you have ever prepared for a job interview, you may have been advised to learn about the company's organization culture. Why should you understand the culture of a future employer?

Why does tax law allow taxpayers to use this special method : ow would you compare the MACRS method for personal property to non-tax financial depreciation? Describe the MACRS system for personal property in terms of both (1) Recovery Period and (2) Depreciation method used. Why is MACRS less "realistic"? Also,..

Classroom to real-world situations and problems : Describe two different things that teachers can do to facilitate students' transfer of what is learned in the classroom to real-world situations and problems. (300 words)

Discuss key features of the structures suggested : Identify appropriate organizational structures for managing international product development. Discuss key features of the structure(s) suggested.

Transformational change management plan : You will create an entire Transformational Change Management Plan for a medium-sized public company that has lost business to a competitor that has chosen to outsource much of its production operations.

What key internal factors influence organizational structure : Discuss the pros and cons of standardizing the marketing management process. Is a standardized process of more benefit to the company pursuing a national market strategy or a global market strategy?

User Account

All Pages