The Complexity of Brian's Family Finances in 2022
The Intricate Family Dynamics of Brian in 2022
After a whirlwind romance, Brian invited Melissa to move with him to Missouri. They are not planning to marry yet, but recently found out that Melissa is pregnant with their first child, who they plan to name Kole. In a gesture of commitment, Brian gifted Melissa $11,180,000 from a money market account and transferred full ownership of their $2,000,000 house to her (with a basis of $750,000).
Additionally, Brian purchased a $2,000,000 life insurance policy with Melissa as the beneficiary, with annual premiums of $12,000. Brian has two daughters from his previous marriage, Kati, age 38, and Karli, age 28. Kati has two children, Cody, 3, and Kali, 13. Karli adopted a little girl, Riley, 2, as she couldn't have children herself.
Financial Support And Family Obligations
Despite being divorced from his first wife Liz for ten years, Brian was paying $10,000 per month in alimony until the court order expired last year. Liz, who has cancer, also received $82,000 from Brian this year. Brian extended his generosity by giving $30,000 to each grandchild, paying $6,000 directly to Kali's school, and gifting 50 shares of Amazon stock to Cody and Riley.
If Riley decides to sell her Amazon stock for $6,500, her taxable gain or loss can be determined as a long-term gain of $6,450 considering the basis at the time of the gift from Brian.
3. If Riley sells her Amazon stock for $6,500, what is her taxable gain or loss, if any (assume Brian did not pay gift tax on this gift)? Is it short term or long term? Show your work/explain your answer. Riley's taxable gain from selling the Amazon stock is $6,450, and it is classified as a long-term gain. Riley's taxable gain or loss can be calculated by finding the difference between the selling price of the Amazon stock and its basis. The basis of the stock is $50 per share, and it was gifted to Riley by Brian. Since Brian did not pay gift tax on this gift, Riley's basis remains the same as Brian's basis. Riley sold the stock for $6,500, which is higher than the basis of $50 per share. The taxable gain is the difference between the selling price and the basis, so the gain is $6,500 - $50 = $6,450. To determine if the gain is short term or long term, we need to consider the holding period of the stock. Since Brian purchased the stock five years ago, the holding period exceeds one year. Therefore, the gain is considered a long-term gain. In summary, Riley's taxable gain from selling the Amazon stock is $6,450, and it is classified as a long-term gain.