Question
During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.) Capital Asset
During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.)
Capital Asset | Market Value | Tax Basis | Holding Period |
---|---|---|---|
L stock | $ 50,000 | $ 41,000 | > 1 year |
M stock | 28,000 | 39,000 | > 1 year |
N stock | 30,000 | 22,000 | < 1 year |
O stock | 26,000 | 33,000 | < 1 year |
Antiques | 7,000 | 4,000 | > 1 year |
Rental home | 300,000* | 90,000 | > 1 year |
*$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property).
Ignore the Net Investment Income Tax.
a. Given that Ron and Anne have taxable income of only $20,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2022 assuming they file a joint return?
b. Given that Ron and Anne have taxable income of $400,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2022 assuming they file a joint return?
Tax Rates for Net Capital Gains and Qualified Dividends
Rate* | Taxable Income | ||||
---|---|---|---|---|---|
Married Filing Jointly | Married Filing Separately | Single | Head of Household | Trusts and Estates | |
0% | $0 - $83,350 | $0 - $41,675 | $0 - $41,675 | $0 - $55,800 | $0 - $2,800 |
15% | $83,351 - $517,200 | $41,676 - $258,600 | $41,676 - $459,750 | $55,801 - $488,500 | $2,801 - $13,700 |
20% | $517,201+ | $258,601+ | $459,751+ | $488,501+ | $13,701+ |
2022 Tax Rate Schedules
Individuals
Schedule X-Single
If taxable income is over: | But not over: | The tax is: |
---|---|---|
$ 0 | $ 10,275 | 10% of taxable income |
$ 10,275 | $ 41,775 | $1,027.50 plus 12% of the excess over $10,275 |
$ 41,775 | $ 89,075 | $4,807.50 plus 22% of the excess over $41,775 |
$ 89,075 | $ 170,050 | $15,213.50 plus 24% of the excess over $89,075 |
$ 170,050 | $ 215,950 | $34,647.50 plus 32% of the excess over $170,050 |
$ 215,950 | $ 539,900 | $49,335.50 plus 35% of the excess over $215,950 |
$ 539,900 | $162,718 plus 37% of the excess over $539,900 |
Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)
If taxable income is over: | But not over: | The tax is: |
---|---|---|
$ 0 | $ 20,550 | 10% of taxable income |
$ 20,550 | $ 83,550 | $2,055 plus 12% of the excess over $20,550 |
$ 83,550 | $ 178,150 | $9,615 plus 22% of the excess over $83,550 |
$ 178,150 | $ 340,100 | $30,427 plus 24% of the excess over $178,150 |
$ 340,100 | $ 431,900 | $69,295 plus 32% of the excess over $340,100 |
$ 431,900 | $ 647,850 | $98,671 plus 35% of the excess over $431,900 |
$ 647,850 | $174,253.50 plus 37% of the excess over $647,850 |
Schedule Z-Head of Household
If taxable income is over: | But not over: | The tax is: |
---|---|---|
$ 0 | $ 14,650 | 10% of taxable income |
$ 14,650 | $ 55,900 | $1,465 plus 12% of the excess over $14,650 |
$ 55,900 | $ 89,050 | $6,415 plus 22% of the excess over $55,900 |
$ 89,050 | $ 170,050 | $13,708 plus 24% of the excess over $89,050 |
$ 170,050 | $ 215,950 | $33,148 plus 32% of the excess over $170,050 |
$ 215,950 | $ 539,900 | $47,836 plus 35% of the excess over $215,950 |
$ 539,900 | $161,218.50 plus 37% of the excess over $539,900 |
Schedule Y-2-Married Filing Separately
If taxable income is over: | But not over: | The tax is: |
---|---|---|
$ 0 | $ 10,275 | 10% of taxable income |
$ 10,275 | $ 41,775 | $1,027.50 plus 12% of the excess over $10,275 |
$ 41,775 | $ 89,075 | $4,807.50 plus 22% of the excess over $41,775 |
$ 89,075 | $ 170,050 | $15,213.50 plus 24% of the excess over $89,075 |
$ 170,050 | $ 215,950 | $34,647.50 plus 32% of the excess over $170,050 |
$ 215,950 | $ 323,925 | $49,335.50 plus 35% of the excess over $215,950 |
$ 323,925 | $87,126.75 plus 37% of the excess over $323,925 |
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