On December 20 of the current year, Winneld has decided to
sell all of the stock that she owns and reinvest the proceeds in state of
Minnesota bonds. Without considering the sales, her taxable income is expected
to exceed $550,000 this year and in future years. Information about the stocks
are provided below:
She is willing to sell some of the stock this year and the remaining stock next
year if it is more advantageous to spread the sales over two years. Assume that
the FMV of the stock will not change during the next 30 days, and ignore the
effect of a sale on threshold amounts. Determine the increase in her income tax
for each of the following alternatives (a, b, & c) and advise Winneld, who
is single.
a. Sell all stock this year.
b. Sell Twins and Timberwolves this year and Viking in March
of next year.
c. Sell Viking and Twins this year and Timberwolves in March
of next year.
d. Determine her Medicare tax on net investment income in
Part a if she has no investment income before selling all the stock.
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