Julio Gonzales is in the 33% tax bracket. He acquired 2,000 shares of stock in Gray Corporation seven years ago at a cost of $50 per share. In the current year, Julio received a payment of $150,000 from Gray Corporation in exchange for 1,000 of his shares in Gray. Gray has E & P of $1,000,000. What income tax liability would Julio incur on the $150,000 payment in each of the following situations? Assume that Julio has no capital losses.
b. The stock redemption does not qualify for sale or exchange treatment.
Julio's tax liability would be $. 22,500
c. For part (b), prepare Julio’s Schedule B (Form 1040) to reflect the tax reporting required of the transaction. Julio’s Social Security number is 123-45-6789. Assume that Julio did not have an interest in or signature authority over any financial account in a foreign country; in addition, he did not have any relationship with a foreign trust.
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Julio Gonzales is in the 33% tax bracket. He acquired 2,000 shares of stock in Gray Corporation seve...
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