Donna files as a head of household in 2017 and has a taxable income of $90,000 including the sale of a stock held as an investment for two years at a gain of $20,000. Only one asset was sold during the year and Donna does not have any capital loss carryovers.

A. What is the amount of Donna's Tax Liability?

B. What is the amount of Donnas's tax Liability if the stock is held for 11 months?

Use the 2017 Tax rate schedule provided below for calculation.

Use 2017 Capital Gain rates schedule provided below for calculation.

Head of Household

If taxable income is:

The tax is:

Not over $13,350. . . . . . . . . . . . . . . . . . . . . .10% of taxable income.

Over $13,350 but not over $50,800. . . . . . .$1,335.00 + 15% of the excess over $13,350.

Over $50,800 but not over $131,200. . . . . .$6,952.50 + 25% of the excess over $50,800.

Over $131,200 but not over $212,500. . . . .$27,052.50 + 28% of the excess over $131,200.

Over $212,500 but not over $416,700. . . . .$49,816.50 + 33% of the excess over $212,500.

Over $416,700 but not over $444,550. . . . .$117,202.50 + 35% of the excess over $416,700.

Over $444,550. . . . . . . . . . . . . . . . . . . . . . . .$126,950.00 + 39.6% of the excess over $444,550.

Capital Gains and Dividends

Capitlal gains and losses are assigned to baskets. Five possible tax rates will apply to most capital gains and losses.

-Ordinary income tax rates (Up to 39.6% in 2017) for gains on assets held one year or less.

-28% rate on collectibles gains and includible Sec. 1202 gains.

-20% rate on gains on assets held for more than one year and qyualified dividends (for taxpayers whose reuglar tax bracket is 39.6%)

-15% rate on gains on assets held for more than one year and qualified dividends (for taxpayers whose regular tax bracket is higher than 15% and less than 39.6%)

-0% rate on gains on assets held for more than one year and qualified dividends (for taxpayers whose regular tax bracket is not higher than 15%)

Note: The net investment income of higher income taxpayers (modified AGI greater than $200,000 for single and $250,000 for married filing jointly) also may be subjected to an additional tax of 3.8%. Net investment income includes dividends and capital gains, along with other types of investment income.