Ida Sells Some Stock to Mae for $20,000 at a Time

question 58

Essay

Ida sells some stock to Mae for $20,000 at a time when the stock is valued at $50,000. Later in the year, she gives Mae $16,000 in cash.
a)What is the amount of Ida's taxable gifts?
b)How would your answer to Part (a)change if Ida gave the cash to Jonathan instead of to Mae?

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Definitions:

Liabilities

Sums of money or other financial obligations that a company is required to pay in the future to creditors, lenders, or suppliers.

Assets

Economic resources owned or controlled by a business, expected to provide future benefits.

Total Assets

The sum of all assets owned by a business, including both current and non-current assets.

New Building

This term refers to the accounting classification of a recently constructed building as a fixed asset, which will be subject to depreciation over its useful life.