An investor in a 28% tax bracket owns land that is a capital asset with a $50,000 basis and a holding period of three years. The investor wishes to sell the asset at a price high enough so that he will have $120,000 in cash after paying the income taxes.
a. What is the minimum price the investor could accept?
b. What is the minimum price the investor could accept if all the gain is subject to the Medicare tax on net investment income?