Net Capital Gains (LO 4.4)

Harold, a single taxpayer, has $30,000 of ordinary income after the standard deduction, and $10,000 in long-term capital gains, for total taxable income of $40,000. Assuming a tax of $3,404 on the $30,000 of ordinary income, what is Harold's tax?

The tax rates on long-term capital gains are as follows:

Income Level	Long-Term Capital Gains Rates
Married filing jointly
$0$80,800	0%
$80,801$501,600	15%
> $501,600	20%

a. $4,094

b. $3,404

c. $4,604

d. $3,623

e. $3,503