Suppose a Person Buys a Share of Stock for $10

question 31

Multiple Choice

Suppose a person buys a share of stock for $10.The rate of taxation on accrual is 50% and the rate of taxation on realization is 25%.The day before the person dies,the stock is worth $20,as it is the day after the person dies.If the stock were sold the day before the person died,the government would receive ________ in taxes; if the stock were sold the day after the person died,the government would receive ________ in taxes.Assume that earnings on assets are taxed as they are in the current U.S.system.

• A) $5; $5
• B) $0; $5
• C) $2.50; $0
• D) $5; $2.50

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Definitions:

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