4. This year Don and his son purchased real estate for an investment. The price
ID: 2401179 • Letter: 4
Question
4. This year Don and his son purchased real estate for an investment. The price of the property was $500,000 and the title named Don and his son as joint tenants with the right of survivorship. Don provided $320,000 of the purchase price abd his son provided the remaining $180,000. Hs Don made a taxable gift and, if so, in what amount?
Multiple Choice
A. Don has made a taxable gift of $236,000
B. Don has made a taxale gift of $70,000
C. Don has made a taxable gift of $22,000
D. Don has made a taxable gift of $56,000
E. None of the choices are correct. - Don did not make a taxable gift.
Explanation / Answer
Solution:
Total price of property = $500,000
The owner of property is Don and his son jointly.
Therefore share of Don son in property = $500,000 /2 = $250,000
Invested amount by Don= $320,000
Invested amount by son = $180,000
Total gift by don to Son = $250,000 - $180,000 = $70,000
Tax free gift for a year = $14,000
Taxable gift by don = $70,000 - $14,000 = $56,000
Hence option D is correct.
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