Kyle, a single taxpayer in the 37% tax bracket engaged in the following disposition transactions during this tax year. You may assume the dispositions were made to unrelated parties unless told otherwise:
- He sold Intel stock purchased 6 months ago for $175,000. Adjusted basis = $33,000
- He sold Microsoft bonds purchased 2 years ago for $300,000. Adjusted basis = $325,000
- He sold a building used in business for $3.5 million. His adjusted basis was $2 million. Accumulated Depreciation was $600,000. He purchased the asset in 2011.
- He sold land used in business for $800,000. His adjusted basis was $400,000
- He sold manufacturing equipment used in business for $280,000. His adjusted basis was $175,000. He originally purchased the equipment three years ago for $325,000
- He sold an antique car for $1 million. He held the car for six months and his basis in it was $925,000.
- Kyle’s grandfather died earlier this year and he bequeathed stock to Kyle. Kyle sold stock that he inherited from his grandfather. His grandfather’s basis in the stock was $25,000. On the date of his grandfather’s death, the stock was worth $60,000. He sold it for $55,000 on 8/31.
- He sold investment land for $40,000. His grandfather gifted the land to Kyle at 5 years ago. At the time of the gift, the land was worth $20,000 and the grandfather’s basis was $45,000.
- He sold his shares of stock in his family’s closely held corporation for $440,000. His basis in the stock was $30,000 and it was acquired many years ago. Kyle is an employee of the corporation.
- He exchanged land held for business for another parcel of land to be held for investment. His basis in old land was $50,000 and he acquired it 8 months prior to the exchange. At the time of the exchange, his land was worth $250,000 and subject to a mortgage of $75,000. The other party assumed the mortgage.
Required: Determine the tax consequences (including character) of the transactions described above. I believe the best thing to do is to create a grid analyzing income categories (like those created in the lectures and homework) and provide a key to each transaction and explanations below the grid. If there are long-term capital gains, please specify the rate(s) for such gains. Simple citation or labeling (e.g., 1231 or capital) will suffice. You do not have to actually compute a tax – notation of rate category will suffice. If something is vague or you feel an explanation is warranted, a simple discussion or bullet point will suffice.