19.03.2023 - 18:06

An individual in the 28 percent federal income tax bracket and 15 percent long-term capital gains tax bracket bought and sold the following securities during the year: Cost basis of stock Proceeds of sale ABC $24,500 $28,600 DEF $35,400 $31,000 GHI $31,00

An individual in the 28 percent federal income tax bracket and 15 percent long-term capital gains tax bracket bought and sold the following securities during the year:

Cost basis of stock Proceeds of sale
ABC $24,500 $28,600
DEF $35,400 $31,000
GHI $31,000 $36,000

What are the taxes owned on the short-term capital gains?

Answers (1)
  • Anthony-Van-Orthon
    April 3, 2023 в 17:31

    There are no short-term capital gains mentioned in the provided information. All the gains mentioned in the table are long-term capital gains.

    To calculate the long-term capital gains tax liability, first, we need to determine the gain on each security. This can be done by subtracting the cost basis from the proceeds of sale. The gains on the securities are as follows:

    • ABC: $28,600 - $24,500 = $4,100
    • DEF: $31,000 - $35,400 = -$4,400 (this is a loss)
    • GHI: $36,000 - $31,000 = $5,000

    Since DEF is a loss, it can be used to offset gains from other securities. The net gain is the sum of gains from all securities except DEF, which is $4,100 + $5,000 = $9,100.

    Next, we need to determine the tax liability on this net gain. Since the individual is in the 28 percent federal income tax bracket and the 15 percent long-term capital gains tax bracket, the tax liability is calculated as follows:

    • Long-term capital gains tax: $9,100 x 15% = $1,365
    • Federal income tax: $9,100 x 28% = $2,548

    Therefore, the total tax liability on the long-term capital gains is $1,365 + $2,548 = $3,913.

    Note that this calculation assumes that the individual has no other income or deductions that would affect their tax liability.

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