Daniel purchased qualified small business corporation stock for $200,000. In 2018 he sells the stock for $2,200,000, realizing a $2,000,000 gain. Determine the taxes due under the following independent situations (apply current tax rates, but ignore any additional Medicare taxes on investment income):a. Daniel purchased the stock on February 1, 2006.b. Daniel purchased the stock on March 1, 2009.c. Daniel purchased the stock on October 1, 2010.
What will be an ideal response?
a. $2,000,000 × 50% × 28% = $280,000 tax due.
b. $2,000,000 × 25% (1 - 75% exclusion) × 28% = $140,000 tax due.
c. $0 tax due. Qualifying small business corporation stock acquired after September 27, 2010 is entitled to a 100% exclusion, assuming all required criteria are met.
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