1. Assume for this question only that Melissa has a healthy baby boy and they name him Kole. The stress of the new baby deteriorates their relationship and Kenny and Melissa break up 6 months later. Kenny is ordered by the court to pay $2,000 a month in child support to Melissa which includes $4,000 a year for day care costs. In addition, Kenny purchased a minivan for Melissa to drive Kole. The FMV of the vehicle is $24,000. For these items only, what is Kenny’s taxable gift to Melissa this year and how much is deductible for income tax on his return?
A) Gift: $20,000 Deductible: $4,000
B) Gift: $10,000 Deductible: $0
C) Gift: $34,000 Deductible: $0
D) Gift: $10,000 Deductible: $4,000
2. Hawkeye Inc. stock has a Bid at $39.95 and an Ask at $40.05. You have placed a Stop Loss (“stop-loss”) order to sell at $40.
What are you telling your broker?
a. Telling broker to sell at $40 to avoid further downside loss.
b. Telling broker to buy more at $40
Given the market prices, will your order be executed
a. Trade would be executed when another trade has been executed at $41 or more, at which time, your Stop-loss order becomes a market order to buy.
b. Trade would be executed when another trade has been executed at $40 or less, at which time, your Stop-loss order becomes a market order to sell.