Mr. and Mrs. Dunbar have taxable income of $260,000 without considering the following sales. Consider the following independent cases where capital gains are recognized.

CASE A:	$10,000 gain from sale of Storm Lake common stock held for seven months.
CASE B:	$10,000 gain from sale of antique clock held for six years.
CASE C:	$10,000 gain from sale of Ames preferred stock held for three years.

Requirement

Determine the marginal tax rate for the capital gain in each case. Ignore the effect of increasing AGI on deductions.

CASE A: $10,000 gain from sale of Storm Lake common stock held for seven months.

A. 33% - the gain is a short-term capital gain (STCG) and taxed at the same rates as ordinary income.

B. 0% - the gain is not taxable because the stock was held for less than a year.

C. 28% - the gain is a Sec. 1202 gain.

D. 20% - the gain is an adjusted net capital gain (ANCG) and the regular tax rate is more than 1515%, but less than 39.639.6%.

CASE B: $10,000 gain from sale of antique clock held for six years.

A. 28% - it is a collectibles gain.

B. 28% - the gain is a Sec. 1202 gain.

C. 0%- the gain on the sale of an antique is not taxable.

D.33% - the gain is a long-term capital gain (LTCG) and taxed at the same rates as ordinary income.

CASE C: $10,000 gain from sale of Ames preferred stock held for three years.

A. 15% - the gain is an adjusted net capital gain (ANCG) and the regular tax rate is more than 1515%, but less than 39.6%.

B. 33% - the gain is a long-term capital gain (LTCG) and taxed at the same rates as ordinary income.

C. 20% - the gain is an adjusted net capital gain (ANCG) and the regular tax rate is 39.639.6%.

D. 28% - the gain is a Sec. 1202 gain.