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The answer at the bottom is the correct one, and the attachment shows the explanation. Can you please show me the steps to working it
The answer at the bottom is the correct one, and the attachment shows the explanation. Can you please show me the steps to working it out? During your clients, Mr and Mrs Howell, owned the following investment assets:
No commissions are charged when noload mutual funds are bought and sold.
Because of the downturn in the stock market, Mr and Mrs Howell decided to sell most of their stocks and the mutual fund
in and to reinvest in municipal bonds. The following investment assets were sold in :
No commissions are charged when noload mutual funds are bought and sold.
The Howells' broker issued them a Form B showing the sales proceeds net of the commissions paid. For example,
the IBM sales proceeds were reported as $ on the Form B they received.
In addition to the sales reflected in the table above, the Howells provided you with the following additional information
concerning :
The Howells received a Form B from the Vanguard mutual fund reporting a $ longterm capital gain
distribution. This distribution was reinvested in additional Vanguard mutual fund shares on
In Mrs Howell loaned $ to a friend who was starting a new multilevel marketing company called LD The
friend declared bankruptcy in and Mrs Howell has been notified she will not be receiving any repayment of the
loan.
The Howells have a $ shortterm capital loss carryover and a $ longterm capital loss carryover from prior
years.
The Howells did not instruct their broker to sell any particular lot of IBM stock.
The Howells earned $ in municipal bond interest, $ in interest from corporate bonds, and $ in qualified
dividends.
Assume the Howells have $ of wage income during the year.
a Compute the Howells' tax liability for the year ignoring the alternative minimum tax and any phaseout provisions assuming they
file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $
Use the tax rate schedules, Dividends and Capital Gains Tax Rates.The Howells tax liability would be $ This is calculated by determining ordinary income of $ which is $ of taxable income
minus $ net longterm capital gain that will be taxed at percent and minus $ qualified dividends that will be taxed at percent. The
longterm capital gains and qualified dividends will be taxed at percent because the Howell's taxable income falls between the maximum zero rate
amount and the maximum percent rate amount. The tax on $ is $ and the percent tax on longterm capital gains and qualified
dividends of $ is $ This results in a total tax liability of $
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