Problem
Identify at least the two main tax issues suggested for each of the scenarios described below:
Victoria's son needs $5,000 for tuition at the Motown School of Dance. Victoria, who is in the 32 percent marginal tax rate bracket, intends to pay the tuition by selling stock worth $5,000 that she paid $2,000 for several years ago.
The Lester Partnership wants to develop a shopping mall on a former farm. The farmer wanted $260,000 for the land, $80,000 for the farm buildings, and $130,000 for the farmhouse. Although it wanted only the land, Lester agreed to the farmer's terms. It then paid Ace Wrecking Company $20,000 to tear down the buildings. Lester was able to sell the scrap lumber from the buildings for $12,000.