Steve Purchases Some Land for $30,000

question 4

Multiple Choice

Steve purchases some land for $30,000.He maintains it,but makes no improvements to it.One year later he sells it for $32,000.Stephanie puts $30,000 in a savings account that pays 6% interest.Steve has to pay the 50% capital gains tax,Stephanie is in the 35% tax bracket.The inflation rate was 2%.Who had the higher before-tax real gain and who had the higher after-tax real gain?

• A)Steve had both the higher before-tax real gain and the higher after-tax real gain.
• B)Steve had the higher before-tax real gain but Stephanie had the higher after-tax real gain.
• C)Stephanie had the higher before-tax real gain but Steve had the higher after-tax real gain.
• D)Stephanie had both the higher before-tax real gain and the higher after-tax real gain.

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Definitions:

Schizophrenia

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception, inappropriate actions and feelings, withdrawal from reality and personal relationships into fantasy and delusion, and a sense of mental fragmentation.

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