Olivia Sells Some Stock She Purchased Several Years Ago for $9,000

question 98

Short Answer

Olivia sells some stock she purchased several years ago for $9,000 to her brother Jack for $12,000.One year later Jack sells the stock for $15,000.The tax consequences to Olivia and Jack are:
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Definitions:

Consolidated Statement

A financial statement that aggregates the financial position and operations of a parent company and its subsidiaries, presenting them as a single economic entity.

Income Tax Calculations

The process of determining the tax payable to the government based on earned income, after allowances and deductions are applied.

Outstanding Common Shares

Refers to the total number of shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares.

Deferred Income Tax

Income tax obligations that a company has accrued but not yet paid, appearing on the balance sheet as a liability.