Part A

Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information: She received $95,000 in salary. She received $16,000 of dividend income. She received $3,700 of interest income on Home Depot bonds. She received $23,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $6,900. She received $14,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,300. Mary receives one exemption ($4,050), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. a. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent. $ b. What is her marginal tax rate? Do not round intermediate calculations. Round your answer to one decimal place. % c. What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places. 2017 Individual Tax Rates TABLE 3.5 Single Individuals If Your Taxable Income Is You Pay This Amount on the Base of the Bracket $ 0 Plus This Percentage on the Excess over the Base (Marginal Rate) 10.0% 15.0 Average Tax Rate at Top of Bracket 10.0% Up to $9,325 $9,325-$37,950 $37,950-$91,900 13.8 932.50 5,226.25 25.0 20.4 28.0 24.3 33.0 29.0 $91,900-$191,650 $191,650-$416,700 $416,700-$418,400 Over $418,400 18,713.75 46,643.75 120,910.25 121,505.25 35.0 29.0 39.6 39.6 Married couples Filing Joint Returns If Your Taxable Income Is You Pay This Amount on the Base of the Bracket Average Tax Rate at Top of Bracket Plus This Percentage on the Excess over the Base (Marginal Rate) 10.0% 15.0 $ 0 10.09 1,865.00 13.8 25.0 19.4 Up to $18,650 $18,650-$75,900 $75,900-$153,100 $153,100-$233,350 $233,350-$416,700 $416,700-$470,700 Over $470,700 28.0 22.4 10,452.50 29,752.50 52,222.50 112,728.00 131,628.00 33.0 27.1 35.0 28.0 39.6 39.6