Homework Answers
Ans- Tax consequences to Victoria:-
(d) She recognizes $120,000 gain in the current year.
As per IRS any amount exceeding the basis(premiums paid here $130,000) is taxable. So here the gain of Victoria ie ($250,000-$130,000=$120,000) is taxable.
So the amount of tax that needs to be paid by Victoria is ($120,000*15/100)=$18,000.(Assumed to be long term capital gain).
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