Marco is a 40% shareholder of Italia, Inc. and his wife Marcella owns the other
ID: 2446481 • Letter: M
Question
Marco is a 40% shareholder of Italia, Inc. and his wife Marcella owns the other 60% of the stock. They have each owned their shares for over 12 years. On August 24, Marco sold all of his stock, with a total basis of $50,000, to Italia, Inc. In return, Marco received cash of $59,900 and a UCLA sweatshirt worth $100. Marco agreed to ““completely terminate his interest”” in Italia, Inc. forever. Italia, Inc. has earnings and profits exceeding $7 million. How much income tax does Marco owe as a result of this sale?
Explanation / Answer
Income of Macro = 59900+100= 60000
Income Tax = 60000+0.10*60000 = 66000