Jenny is a real estate investor who just sold an income property for a gain...
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Jenny is a real estate investor who just sold an income property for a gain of $200,000. The closing took place on February 1, 2019. Jenny plans to use the proceeds from this sale to immediately purchase a new income property that reliably generates $30,000 rental income each year. Once acquired, Jenny does not intend to make any renovations and/or changes to the new income property, and she plans to dispose of it in approximately ten years.
Jenny does not want to expose herself to risk, thus she will be satisfied with the reliable cash flows of $30,000 from rental income.
(a) What investment strategy is Jenny following?
(b) If the closing for the new income property takes place on October 1, 2019, will Jenny be able to defer payment of capital gains taxes?
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