tax

TOPIC 1.
Amelia purchased 400 shares of BBC common stock several years ago for $1,600. On June 30, Amelia sold the shares of BBC common for $600 and then purchased 225 shares of BBC preferred stock two days later for $800. The BBC preferred stock is not convertible into BBC common stock. What is Amelia’s deductible loss from the sale of the 400 shares of BBC common stock?

TOPIC 2.
Jorge received a stock tip from a long-time friend. Since he did not have enough cash on hand to invest, Jorge decided to take out a $20,000 loan in order to buy the stock. The loan terms were 8 percent interest with interest-only payments due each year for five years. At the end of the five-year period the entire loan principal is due. When Jorge closed on the loan on April 1, 2017, he decided to invest $16,000 in stock and to use the remaining $4,000 to purchase a jet-ski. Jorge is unsure how he will treat the interest paid on the $20,000 loan. In 2017, Jorge paid $1,200 interest expense on the loan. For tax purposes, how should he treat the 2017 interest expense? (Hint: Visit www.irs.gov and consider IRS Publication 550)

: Discuss the way tax law shapes social policy by methods such as imposing “sin-taxes,” and also by preferential taxation in some areas, and by allowing certain deductions in others. What does this mean? Does it work? Good idea? Bad idea?