In 2000, Ms. Ennis, a head of household, contributed $63,000 in exchange for 630 shares of Seta stock. Seta is a qualified small business. This year, Ms. Ennis sold all 630 shares for $148,050. Her only other investment income was an $11,025 long-term capital gain from the sale of land. Her taxable income before consideration of her two capital transactions is $756,000. Assume the taxable year is 2020. Use Individual tax rate schedules and tax rates for capital gains and qualified dividends.
Required:
- Compute Ms. Enniss income tax and Medicare contribution tax for the year.
- How would the computation change if Ms. Ennis acquired the Seta stock in 2011 instead of 2000?
- How would the computation change if Ms. Ennis acquired the Seta stock in 2015 instead of 2000?
a.
| | Amount |
| Taxable Income | |
| Total Income Tax | |
| Medicare Contribution Tax | |
b.
| |
| Taxable Income | |
| Total Income Tax | |
| Medicare Contribution Tax | |
c.
| |
| Taxable Income | |
| Total Income Tax | |
| Medicare Contribution Tax | |
Wy work 4 Production/bne/accounting/jones_24e/2020 individual_tax_rate schedules.jpg Individual Tax Rate Schedules Married Filing Jointly and Surviving Spouse If taxable income is: Not over $19.750 Over $19,750 but not over $80,250 Over $80,250 but not over $171,050 Over $171,050 but not over $326,600 Over $326,600 but not over $414.700 Over $414,700 but not over $622.050 Over $622,050 The tax is: 10% of taxable income $1.975 + 12% of excess over $19,750 $9,235 + 22% of excess over $80,250 $29,211 + 24% of excess over $171,050 $66.543 + 32% of excess over $326,600 $94,735 + 35% of excess over $414,700 $167,307.50 + 37% of excess over $622,050 The tax is: 10% of taxable income $987.50 + 12% of excess over $9.875 $4,617,50 + 22% of excess over $40,125 $14.605.50 + 24% of excess over $85,525 $33,271.50 + 32% of excess over $ 163,300 $47.367.50 + 35% of excess over $207,350 $83,653.75 + 37% of excess over $311,025 Married Filing Separately If taxable income is: Not over $9,875 Over $9,875 but not over $40.125 Over $40,125 but not over $85,525 Over $85,525 but not over $163,300 Over $163,300 but not over $207,350 Over $207,350 but not over $311,025 Over $311,025 Heads of Household If taxable income is: Not over $14,100 Over $14,100 but not over $53,700 Over $53,700 but not over $85,500 Over $85.500 but not over $163,300 Over $163,300 but not over $207,350 Over $207,350 but not over $518,400 Over $518,400 Single If taxable income is: Not over $9,875 Over $9,875 but not over $40,125 Over $40,125 but not over $85.525 Over $85,525 but not over $163,300 Over $163,300 but not over $207,350 Over $207,350 but not over $518,400 Over $518,400 The tax is: 10% of taxable income $1.410 + 12% of excess over $14,100 $6,162 + 22% of excess over $53,700 $13,158 + 24% of excess over $85,500 $31,830 + 32% of excess over $163,300 $45,926 + 35% of excess over $207,350 $154,793.50 + 37% of excess over $518,400 The tax is: 10% of taxable income $987.50 + 12% of excess over $9.875 $4,617.50 + 22% of excess over $40,125 $14.605.50 + 24% of excess over $85,525 $33,271.50 + 32% of excess over $163,300 $47.367.50 + 35% of excess over $207,350 $156,235 + 37% of excess over 518,400 52 Tax rates for capital gains and qualified dividends. Rate Married Filing Married Filing Single Head of Jointly Separately Household 0%* $0-$80,000 $0-$40,000 $0 - $40,000 $0-$53,600 $80,001 - $40,001 - $40,001 - $53,601 - $496,600 $248,300 $441,450 $469,050 20% $496,601+ $248,301+ $441,451+ $469,051+ * The highest income amount in this range for each filing status is referred to as maximum zero rate amo ** The highest income amount in this range for each filing status is referred to as maximum 15-percent ar 15%** I CH Wy work 4 Production/bne/accounting/jones_24e/2020 individual_tax_rate schedules.jpg Individual Tax Rate Schedules Married Filing Jointly and Surviving Spouse If taxable income is: Not over $19.750 Over $19,750 but not over $80,250 Over $80,250 but not over $171,050 Over $171,050 but not over $326,600 Over $326,600 but not over $414.700 Over $414,700 but not over $622.050 Over $622,050 The tax is: 10% of taxable income $1.975 + 12% of excess over $19,750 $9,235 + 22% of excess over $80,250 $29,211 + 24% of excess over $171,050 $66.543 + 32% of excess over $326,600 $94,735 + 35% of excess over $414,700 $167,307.50 + 37% of excess over $622,050 The tax is: 10% of taxable income $987.50 + 12% of excess over $9.875 $4,617,50 + 22% of excess over $40,125 $14.605.50 + 24% of excess over $85,525 $33,271.50 + 32% of excess over $ 163,300 $47.367.50 + 35% of excess over $207,350 $83,653.75 + 37% of excess over $311,025 Married Filing Separately If taxable income is: Not over $9,875 Over $9,875 but not over $40.125 Over $40,125 but not over $85,525 Over $85,525 but not over $163,300 Over $163,300 but not over $207,350 Over $207,350 but not over $311,025 Over $311,025 Heads of Household If taxable income is: Not over $14,100 Over $14,100 but not over $53,700 Over $53,700 but not over $85,500 Over $85.500 but not over $163,300 Over $163,300 but not over $207,350 Over $207,350 but not over $518,400 Over $518,400 Single If taxable income is: Not over $9,875 Over $9,875 but not over $40,125 Over $40,125 but not over $85.525 Over $85,525 but not over $163,300 Over $163,300 but not over $207,350 Over $207,350 but not over $518,400 Over $518,400 The tax is: 10% of taxable income $1.410 + 12% of excess over $14,100 $6,162 + 22% of excess over $53,700 $13,158 + 24% of excess over $85,500 $31,830 + 32% of excess over $163,300 $45,926 + 35% of excess over $207,350 $154,793.50 + 37% of excess over $518,400 The tax is: 10% of taxable income $987.50 + 12% of excess over $9.875 $4,617.50 + 22% of excess over $40,125 $14.605.50 + 24% of excess over $85,525 $33,271.50 + 32% of excess over $163,300 $47.367.50 + 35% of excess over $207,350 $156,235 + 37% of excess over 518,400 52 Tax rates for capital gains and qualified dividends. Rate Married Filing Married Filing Single Head of Jointly Separately Household 0%* $0-$80,000 $0-$40,000 $0 - $40,000 $0-$53,600 $80,001 - $40,001 - $40,001 - $53,601 - $496,600 $248,300 $441,450 $469,050 20% $496,601+ $248,301+ $441,451+ $469,051+ * The highest income amount in this range for each filing status is referred to as maximum zero rate amo ** The highest income amount in this range for each filing status is referred to as maximum 15-percent ar 15%** I CH
