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ow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator-assignment D Municipal Statistics false UC UNEMPOMENT rino D KEYSTONE COLLECT Zip hip-Te t Mess: D Business ET and LST os REAL ESTATER ALS ar miguel pay ! eBook Table 3-4 Calcutator Capital Gains and Losses (LO. 5) Rikki has the following capital gains and losses for the current year: Short-term capital gain Long-m capital gain Long-term capital loss Collectibles gain $1,000 11,000 3,000 8,000 2,000 Assume that Rikki is in the 32% marginal tax rate bracket and Rikki's AGI is less than $200,000. Refer to the Capital gains and losses (individuals) table to amen er the following question Due to the effect of the capital gains and losses, Rikki's taxable income is increased bv and her tax flability is increased Vi by si Capital gains and losses are determined on an annual basis, aporepated throuon a neting orocedure Previous Next Check My Work All work saved 254 PMExplanation / Answer
LO.5 Capital Gains and Losses We are assuming that collectible gains or losses are long term Short Term Capital Gain $1,000 Long Term Capital Gain Long term Capital gain $11,000 Long Term Capital Loss ($3,000) Collectibles gain $8,000 Collectibles loss ($2,000) Net Long term capital gain $14,000 Tax on above capital gain Short Term capital gain is taxed at ordinary Income tax rate - 1000*32% 320 Tax on Collectibles (8000-2000)*28% 1680 Tax on Long Term capital (11000-3000)*15% 1200 Total Tax Liability 3200 Due to the effect of the capital gains and losses, Rikki's Taxable income is increased by $ 14000 and her tax liability is increased by $ 3200 LO.5 First we would compute taxable income of Jason and Jill Commission $82,000 Salary $46,000 Interest income $8,000 Dividend Income $5,000 Net Long Term capital gain $30,000 (80000 - (70000/2)) 35000 45000 45000-15000 - Short term capital loss Gross Income $171,000 Deductions for adjusted gross income $28,000 Adjusted Gross Income $143,000 Standard Deduction $24,000 Taxable Income $119,000 Since Dividend and net long term capital gain have different tax rates, we would calculate income tax first excluding this two items Taxable Income $119,000 Dividend Income $5,000 Net Long Term capital gain $30,000 $84,000 $ 8907 + (84000-77400)*22% $10,359 Tax on Dividend (Assuming qualified dividend) 5000*15% 750 Tax on Net Long term capital gain 30000*15% 4500 Total Tax Liability $15,609 Jason and Jill's Taxable income is $ 119000. The tax on their eligible dividends and capital gains is $ 5250 and total income tax libaility is $ 15609 for the current year LO.6 Cash Basis of accounting Beg Accounts Receivable $12,000 Current year bills $210,000 Cash Received $180,000 Uncollectible $8,000 Ending Bal $34,000 In Cash basis, the revenue is recognised as an when cash is received The Cash Received is $ 180000. Therefore the Gross income if Arlene uses cash basis of accounting is $ 180000 Accrual basis of accounting In accrual basis, revenue is recognised when it is earned. The revenue earned is $ 210000. Therefore gross income is $ 210000. In this case Arlene is allowed bad debt deduction of $ 8000 from gross income
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