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Tax Planning Question: assume no mortgages, 20% capital gains tax rate, 35% ordinary income tax rate, all property held as community property with right of survivorship. John and Joni purchased a single family home in Chico CA in 1990 with a purchase price of $150,000. They lived in the house for two years and sold it in 1995 for $225,000. John and Joni used the $225, 000 sales proceeds as a down payment to buy a four-plex apartment building for $500,000 in 1995. In 2000, John and Joni did a 1031 exchange and sold the four-plex for $700,000 and purchased an eight-plex apartment building for $1,000,000. In 2010, John and Joni did a second 1031 exchange and sold the eight-plex apartment building for $1,500,000 and purchased an ocean front condo in Newport Beach, CA for $2,000,000 as a rental property In 2012, John and Joni decided to retire and move into the Newport Beach condo. 1) What is the tax liability for selling the single-family home in 1995? 2) What is the tax liability for selling the four-plex in 2000? 3) What is the tax liability for selling the eight-plex in 2010? 4) What is the tax liability when they convert the rental condo to a principal residence? 5) What is the tax liability if the sell the condo in 2015? 6) What is the tax liability if John passes away in 2014 and Joni sells the condo in 2015? Tax Planning Question: assume no mortgages, 20% capital gains tax rate, 35% ordinary income tax rate, all property held as community property with right of survivorship. John and Joni purchased a single family home in Chico CA in 1990 with a purchase price of $150,000. They lived in the house for two years and sold it in 1995 for $225,000. John and Joni used the $225, 000 sales proceeds as a down payment to buy a four-plex apartment building for $500,000 in 1995. In 2000, John and Joni did a 1031 exchange and sold the four-plex for $700,000 and purchased an eight-plex apartment building for $1,000,000. In 2010, John and Joni did a second 1031 exchange and sold the eight-plex apartment building for $1,500,000 and purchased an ocean front condo in Newport Beach, CA for $2,000,000 as a rental property In 2012, John and Joni decided to retire and move into the Newport Beach condo. 1) What is the tax liability for selling the single-family home in 1995? 2) What is the tax liability for selling the four-plex in 2000? 3) What is the tax liability for selling the eight-plex in 2010? 4) What is the tax liability when they convert the rental condo to a principal residence? 5) What is the tax liability if the sell the condo in 2015? 6) What is the tax liability if John passes away in 2014 and Joni sells the condo in 2015

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