In 2000, Ms. Ennis, a head of household, contributed $50,000 in exchange for 500 shares of Seta stock. Seta is a qualified small business. This year, Ms. Ennis sold all 500 shares for $117,400. Her only other investment income was an $8,600 long-term capital gain from the sale of land. Her taxable income before consideration of her two capital transactions is $590,000. Assume the taxable year is 2021. Use Individual tax rate schedules and Tax rates for capital gains and qualified dividends.

Required:

1. Compute Ms. Enniss income tax and Medicare contribution tax for the year.
2. How would the computation change if Ms. Ennis acquired the Seta stock in 2011 instead of 2000?
3. How would the computation change if Ms. Ennis acquired the Seta stock in 2018 instead of 2000?

Individual Tax Rate Schedules

Married Filing Jointly and Surviving Spouse

If taxable income is	The tax is
Not over $19,900	10% of taxable income
Over $19,900 but not over $81,050	$1,990.00 + 12% of excess over $19,900
Over $81,050 but not over $172,750	$9,328.00 + 22% of excess over $81,050
Over $172,750 but not over $329,850	$29,502.00 + 24% of excess over $172,750
Over $329,850 but not over $418,850	$67,206.00 + 32% of excess over $329,850
Over $418,850 but not over $628,300	$95,686.00 + 35% of excess over $418,850
Over $628,300	$168,993.50 + 37% of excess over $628,300

Married Filing Separately

If taxable income is	The tax is
Not over $9,950	10% of taxable income
Over $9,950 but not over $40,525	$995.00 + 12% of excess over $9,950
Over $40,525 but not over $86,375	$4,664.00 + 22% of excess over $40,525
Over $86,375 but not over $164,925	$14,751.00 + 24% of excess over $86,375
Over $164,925 but not over $209,425	$33,603.00 + 32% of excess over $164,925
Over $209,425 but not over $314,150	$47,843.00 + 35% of excess over $209,425
Over $314,150	$84,496.75 + 37% of excess over $314,150

Head of Household

If taxable income is	The tax is
Not over $14,200	10% of taxable income
Over $14,200 but not over $54,200	$1,420.00 + 12% of excess over $14,200
Over $54,200 but not over $86,350	$6,220.00 + 22% of excess over $54,200
Over $86,350 but not over $164,900	$13,293.00 + 24% of excess over $86,350
Over $164,900 but not over $209,400	$32,145.00 + 32% of excess over $164,900
Over $209,400 but not over $523,600	$46,385.00 + 35% of excess over $209,400
Over $523,600	$156,355.00 + 37% of excess over $523,600

Single

If taxable income is	The tax is
Not over $9,950	10% of taxable income
Over $9,950 but not over $40,525	$995.00 + 12% of excess over $9,950
Over $40,525 but not over $86,375	$4,664.00 + 22% of excess over $40,525
Over $86,375 but not over $164,925	$14,751.00 + 24% of excess over $86,375
Over $164,925 but not over $209,450	$33,603.00 + 32% of excess over $164,925
Over $209,450 but not over $523,600	$47,843.00 + 35% of excess over $209,425
Over $523,600	$157,804.25 + 37% of excess over $523,600

Tax rates for capital gains and qualified dividends

Rate	Married Filing Jointly	Married Filing Separately	Single	Head of Household
0%*	$0-$80,800	$0-$40,400	$0-$40,400	$0-$54,100
15%**	$80,801-$501,600	$40,401-$250,800	$40,401-$445,850	$54,101-$473,750
20%	$501,601+	$250,801+	$445,851+	$473,751+

* The highest income amount in this range for each filing status is referred to as maximum zero rate amount.

** The highest income amount in this range for each filing status is referred to as maximum 15-percent amount