LO.2 Sean is in the business of buying and selling stocks and bonds. He has a bond of Green Corporation for which he paid $200,000. The bond is currently worth only $50,000. Discuss whether Sean can take a $150,000 loss for a business bad debt or for a worthless security.
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LO.2 Sean is in the business of buying and selling stocks and bonds. He has a bond of Green Corporation for which he paid $200,000. The bond is currently worth only $50,000. Discuss whether Sean can take a $150,000 loss for a business
The company can purchase the bonds issued by another corporation. The company that purchases the bonds classifies it as an investment in bonds. The bonds are long-term debt instruments, the company issue when it raises money.
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- Sean is the business of buying and selling stocks and bonds. He has a bond of Green Corporation for which he paid $200,000. The bond is currently worth only $50,000. Discuss wether Sean can take a $150,000 loss for a business bad debt or for a worthless security.Steinar loaned a friend $9,500 to buy some stock 3 years ago. In the current year the debt became worthless. a. How much is Steinar's deduction for the bad debt for this year? (Assume he has no other capital gains or losses.) 4,750 X as a nonbusiness ✓ bad debt. Feedback ▼ Check My Work Bad debts fall into one of two categories, business bad debts or nonbusiness bad debts. Debts that arise from the taxpayer's trade or busin are classified as business bad debts, while all other debts are considered nonbusiness bad debts. The distinction between the two types of debts is important, since business bad debts are ordinary deductions and nonbusiness bad debts are short-term capital losses. b. What can Steinar do with the deduction not used this year? The remaining $ 0x can be carried forward as a short-term capital loss and deducted in future years, subject to an annual limitation20. The computer of your neighbor, who is an accountant, was hacked by mystical creatures. Your neighbor needs your help in reconstructing the amortization table for his company's investment in 3-year bonds: A D. E 1. Date Interest received Interest income Amortization Present valkue 2. 1/1/x1 3 12/31/x1 280,000 2,067,602 4. 12/31/x2 31,888 2,035,714 12/31/x3 280,000 244,286 How much is the face amount of the bonds and what is the effective interest rate? a. 2,096,073; 12% b. 2,000,000; 12% c. 2,071,428; 14% d. I don't know. My brain is hacked too!O
- Mark buys a financial asset from the DBA. This financial asset is an instrument of short term borrowing. He hasbought it because he doesn’t want to take risk and wants an assured return. This instrument is promissory note. It ishighly liquid. The instrument is also known as zero coupon bonds. On this instrument it is written T-91. Based onthe above case study, answer the following:a. Which financial asset is indicated in the above case?b. On whose behalf does the DBA issue this instrument?c. Why is this instrument called as the zero coupon bond?d. What does T-91 denote here?e. What is the minimum amount for which this instrument bond?1.Three years ago, Morris loaned Alma $5,000 (Year 1) with the understanding that the loan would be repaid in two years. Last year (Year 3) Alma filed for bankruptcy, and Morris learned that he would receive $0.10 on the dollar. In the current year, Year 4, the final settlement was made, and Morris received $300. Assuming the loan is a nonbusiness bad debt, how should Morris account for the loan? a. $4,700 ordinary loss in the current year. b. $3,000 ordinary loss last year and $1,700 ordinary loss in the current year c. $4,700 short-term capital loss in the current year. d. $3,000 short-term capital loss last year and $1,700 short-term capital loss in the current year.Q : Discuss different types and characteristics of debt instruments with specific reference of Bonds . Due to covid19 the equity market exhibits down and move and hence he considers it a risky investment. down so he considers it is quite risky.Mr .Sikander looking to have stable income. Mr.sikander is a retired person and just received Amount 40,000,000 on account of different funds. He is looking to buy Bonds .Mr .Saleem a friend of Sikander suggested him to buy MCB bonds .The bond has 25 years' life and was issued 13 years ago.It pays 11.5 percent coupon rate with face value PKR 1050. Mr. Ahmed wants to make 14% profit from his investments. a) Should Mr.sikander buy MCB bond if it is currently selling at 930? b) How many bonds can he buy if the bond is selling at calculated price? c) Write features of Zero-coupon bond and why do investors buy it when they offer nothing periodically?
- Fred’s net worth is shown in the table below. Assets are positive numbers and liabilities are negative numbers. If Fred’s net worth is $74,000 how much does he owe in credit card debt?K2. Unstable Variable Material Company owns bonds from a friendly company called The Followers. They classified these as bonds "available for sale" or AFS. During 2023, Unstable hit pay dirt, and these bonds increased by $4 million. They also received interest of $3 million. Given all these numbers, what's the bottom line effect on Unstable's 2023 financial statements?LO.4 Vic, who was experiencing financial difficulties, was able to adjust his debts as follows: a. Vic is an attorney. Vic owed his uncle 25,000. The uncle told Vic that if he serves as the executor of the uncles estate, Vics debt will be canceled in the uncles will. b. Vic borrowed 80,000 from First Bank. The debt was secured by land that Vic purchased for 100,000. Vic was unable to pay, and the bank foreclosed when the liability was 80,000, which was also the fair market value of the property. c. The Land Company, which had sold land to Vic for 80,000, reduced the mortgage on the land by 12,000. Determine the tax consequences to Vic.
- Discuss different types and characteristics of debt instruments with specific reference of Bonds. Due to covid19 the equity market exhibits down move and hence he considers it a risky investment. down so he considers it is quite risky. Mr. Sikander looking to have stable income. Mr. Sikander is a retired person and just received Amount 40,000,000 on account of different funds. He is looking to buy Bonds. Mr. Saleem a friend of Sikander suggested him to buy MCB bonds. The bond has 25 years' life and was issued 13 years ago. It pays 11.5 percent coupon rate with face value PKR 1050. Mr. Ahmed wants to make 14% profit from his investments. 1. Should Mr. Sikander buy MCB bond if it is currently selling at 930? 2. How many bonds can he buy if the bond is selling at calculated price? 3. Write features of Zero-coupon bond and why do investors buy it when they offer nothing periodically?Discuss different types and characteristics of debt instruments with specific reference of Bonds. Due to covid19 the equity market exhibits down move and hence he considers it a risky investment. down so he considers it is quite risky. Mr. Sikander looking to have stable income. Mr. Sikander is a retired person and just received Amount 40,000,000 on account of different funds. He is looking to buy Bonds. Mr. Saleem a friend of Sikander suggested him to buy MCB bonds. The bond has 25 years’ life and was issued 13 years ago. It pays 11.5 percent coupon rate with face value PKR 1050. Mr. Ahmed wants to make 14% profit from his investment How many bonds can he buy if the bond is selling at calculated price?Discuss different types and characteristics of debt instruments with specific reference of Bonds. Due to covid19 the equity market exhibits down move and hence he considers it a risky investment. down so he considers it is quite risky. Mr. Sikander looking to have stable income. Mr. Sikander is a retired person and just received Amount 40,000,000 on account of different funds. He is looking to buy Bonds. Mr. Saleem a friend of Sikander suggested him to buy MCB bonds. The bond has 25 years’ life and was issued 13 years ago. It pays 11.5 percent coupon rate with face value PKR 1050. Mr. Ahmed wants to make 14% profit from his investments.Write features of Zero-coupon bond and why do investors buy it when they offer nothing periodically?
