Adam Purchased Stock in 2006 for $100,000

question 60

Essay

Adam purchased stock in 2006 for $100,000.He is considering selling it in 2014. It is currently worth $2,100,000 so he would realize a $2,000,000 gain.Adam is in the top tax bracket.Determine the taxes due under the following independent situations (ignore any additional Medicare taxes on investment income):
(a)Adam sells the stock,and no special circumstances apply.
(b)The stock is qualified small business corporation stock.
(c)The stock is qualified small business corporation stock.Within 60 days Adam invests $2,500,000 in new qualifying small business corporation stock.
(d)The stock is qualified small business corporation stock.Within 60 days Adam invests $2,000,000 in new qualifying small business corporation stock.

---

Definitions:

Football Tickets

Passes that allow entry to football (soccer or American football) games, often purchased by fans to watch their favorite teams play.

Demand

Refers to the quantity of a particular good or service that consumers are willing and able to purchase at various prices during a given period of time.

Price-Elastic

Describing a situation where the demand for a product significantly changes in response to changes in its price.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers, normally downward sloping.