Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Question 4 In 2016, Dotty Parker inherited a substantial fortune
Question 4 In 2016, Dotty Parker inherited a substantial fortune. Having been a penniless performance artist prior to this, she had never had funds to invest before this time. On the advice of a friend, she invested a small portion of her inheritance in rental real estate and the shares of various growth companies.As a result of a disposition in December 2016, Dotty had a capital gain of $25,000, all ofwhich was eliminated through the use of the capital gains exemption.Dotty also invested $425,000 in the shares of Spec Inc, a qualified small business corporation. While it made a small amount in its first year of operations in 2016, it had serious losses in 2017. The shares paid no dividends in 2016 or 2017.During 2018, the directors of Spec Inc concluded there was no hope of recovery for the business, resulting in a decision to liquidate the company. After the claims of the creditors were settled, Dotty’s shares were canceled and she received a final payment of $125,000.During 2017 and 2018, Dotty had the following amounts of income:2017 2018Taxable capital gains $5,000 $6,000Net rental income 16,000 14,000Interest income 36,000 24,000The only tax credit available to Dotty is the basic personal amount ($11,635 in 2017). Dotty had no income in 2015 and taxable income equal to her basic personal amount in 2016. At the beginning of 2017 she did not have any loss carryovers from previous years. Required: Determine Dotty’s optimal Taxable Income for the years ending December 31, 2017 and 2018 and any available loss carryovers.
