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.
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 - $78,750 | $0 - $39,375 | $0 - $39,375 | $0 - $52,750 | $0 - $2,650 |
15% | $78,751 - $488,850 | $39,376 - $244,425 | $39,376 - $434,550 | $52,751 - $461,700 | $2,651 - $12,950 |
20% | $488,851+ | $244,426+ | $434,551+ | $461,701+ | $12,951+
|
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 2019 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 2019 assuming they file a joint return?
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