Question 1) Sybil gave her son Todd 1,000 shares of XYZ stock on January 16, 2007. The stock's high and low selling prices that day were $55 and $53. Sybil had purchased the stock in 2006 for $70 per share. At the beginning of 2008, Todd sold the shares for $62,000. Provide the details of both income and gift tax effects for these events.
Question 2) William has decided to purchase a large apartment complex. He pays $100,000 cash, obtains a loan on the property for $500,000, and assumes the first mortgage balance of $250,000. He also gives the sellers $100,000 of marketable securities that he purchased three years ago for $125,000 and paid a finder's fee of $5,000, legal fees of $6,000, and transfer taxes of $12,000. What is William's acquisition basis for the building? Does he have any other tax consequences as a result of this purchase?
Question 3) For the stocks ABC and XYZ below, determine the annual realized return, realized return over the two years, average annual return, the Compound Annual Growth Rate (CAGR), and a measure of variation for the following stock data. Label your answers clearly. Briefly compare the two stocks.
| Date |
ABC |
Dividend |
|
XYZ |
Dividend |
| 01-12-08 |
$29.50 |
$0.55 |
|
$75.24 |
$5.00 |
| 03-11-08 |
$27.03 |
|
|
$80.36 |
|
| 01-10-08 |
$26.74 |
|
|
$91.05 |
|
| 02-09-08 |
$28.72 |
$0.50 |
|
$114.55 |
$5.00 |
| 01-08-08 |
$29.54 |
|
|
$119.22 |
|
| 01-07-08 |
$28.36 |
|
|
$124.85 |
|
| 02-06-08 |
$27.90 |
$0.45 |
|
$115.63 |
$5.00 |
| 01-05-08 |
$27.75 |
|
|
$126.27 |
|
| 01-04-08 |
$28.45 |
|
|
$117.27 |
|
| 03-03-08 |
$35.55 |
$0.40 |
|
$111.87 |
$5.00 |
| 01-02-08 |
$32.56 |
|
|
$110.62 |
|
| 02-01-08 |
$34.50 |
|
|
$103.67 |
|
| 03-12-07 |
$31.59 |
$0.35 |
|
$99.99 |
$5.00 |
| 01-11-07 |
$26.46 |
|
|
$95.23 |
|
| 01-10-07 |
$27.61 |
|
|
$88.76 |
|
| 04-09-07 |
$27.74 |
$0.30 |
|
$90.88 |
$5.00 |
| 01-08-07 |
$27.65 |
|
|
$96.54 |
|
| 02-07-07 |
$26.86 |
|
|
$98.12 |
|
| 01-06-07 |
$25.11 |
$0.25 |
|
$101.15 |
$5.00 |
| 01-05-07 |
$26.75 |
|
|
$102.45 |
|
| 02-04-07 |
$26.16 |
|
|
$97.85 |
|
| 01-03-07 |
$25.45 |
$0.20 |
|
$90.24 |
$5.00 |
| 01-02-07 |
$25.87 |
|
|
$88.97 |
|
| 03-01-07 |
$26.12 |
|
|
$94.63 |
|