Gross income with respect to foregoing transaction

Assignment Help Financial Management

Reference no: EM131891688

In 2014, Corporation X entered into a forward contract with Corporation Y whereby X would purchase 10 shares of ABC Corporation’s stock from Y for $10 on February 3, 2016. On February 3, 2015, the ABC Corporation stock had appreciated and the forward contract is worth $110. The forward contract settles on February 3, 2016 and X pays $10 for the ABC stock which is delivered to X on that date.

1. What must X include in gross income with respect to the foregoing transaction in 2015?

2. What must X include in gross income with respect to the foregoing transaction in 2016?

3. What are the tax consequences if X sells all 10 shares of ABC stock on February 3, 2017 at $12 a share?

4. Assume Y purchased 10 shares of ABC stock in 2000 at $5 a share. What are the tax consequences to Y when the forward contract settles on February 3, 2016?

Reference no: EM131891688

Questions Cloud

The market requires a return of 8 percent on the firm stock : Gontier Corporation stock currently sells for $64.78 per share. The market requires a return of 8 percent on the firm’s stock.

Conduct an analysis of legality of union-organizing actions : Conduct an analysis of legality of the union-organizing actions, including communications using employer e-mail and distributing literature at the employer's.

As a project manager how do you change the culture : Deerborn Electronics Scenario: You work for Deerborn Electronics, a multinational firm providing parts for mobile devices.

Budget within a business context : Who is responsible for setting and following a budget within a business context? Which components of the organization should play which roles in setting

Gross income with respect to foregoing transaction : What must X include in gross income with respect to the foregoing transaction in 2015?

How the four communication flows : What are some examples of how the four communication flows (down, up, horizontal, external) are used for communication?

How do you plan to communicate with your stakeholders : You schedule a meeting with managers from the impacted departments, and only seven of the 13 you invited show up to discuss the project.

Describe the purpose of a wbs : Project Work Breakdown Structures (WBS) play an important role when defining the scope of a project and developing a project schedule.

Data vizualization fundamentals-tableau : Atlas Bikes has been selling their bikes since 1975 in the United States. Senior Management wants to review numbers and come up with their expansion strategy.

User Account

All Pages