Joe, Who Is in the 33% Tax Bracket in 2012

question 61

Essay

Joe, who is in the 33% tax bracket in 2012, expects to retire in 2013 and be in the 25% tax bracket. He plans to donate $50,000 to his church. Because he will not have the cash available until 2013, Joe donates land (long-term capital gain property) with a basis of $10,000 and fair market value of $50,000 to the church in December 2012. He reacquires the land for $50,000 in February 2013. Discuss Joe's tax objectives and all tax issues related to his actions.

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Definitions:

Need for Achievement

A psychological drive that influences an individual to pursue and achieve goals.

Delay Gratification

The ability to resist the temptation for an immediate reward and wait for a later, often larger or more enduring reward.

Competitive Careers

Careers in which individuals vie against others for advancement, recognition, or rewards in their professional fields.

Biological Needs

Essential requirements for human survival, such as food, water, shelter, and sleep.