Schedule Married Joint Taxable income over: But not over: The tax is: $0 $18,650

Question

Schedule Married Joint

Taxable income over: But not over: The tax is:

$0 $18,650 10% of taxable income

$18,650 $75,900 $1,865 plus 15% of the excess over $18,650

$75,900 $153,100 $10,452.50 plus 25% of the excess over $75,900

$153,100 $233,350 $29,752.50 plus 28% of the excess over $153,100

$233,350 $416,700 $52,222.50 plus 33% of the excess over 233,350

$416,700 $470,700 $112,728.00 plus 35% of the excess over $416,700

$470,700 - $131,628.00 plus 39.6% of the excess over $470,700

During the current year, Ron and Anne sold the following assets:

*$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property).

Ignore the Net Investment Income Tax.

b. Given that Ron and Anne have taxable income of $400,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2017 assuming they file a joint return? (Round all your intermediate computations to the nearest whole dollar amount.)

Capital Asset Market Value Tax Basis Holding Period L stock $ 50,000 $ 41,000 > 1 year M stock 28,000 39,000 > 1 year N stock 30,000 22,000 < 1 year O stock 26,000 33,000 < 1 year Antiques 7,000 4,000 > 1 year Rental home 300,000* 90,000 > 1 year

Explanation / Answer

a. Ron and Anne's netting process is calculated as follow: Description Short term Long term overall Long term -28% Long term 25% Long term 15% Stock N $8,000 Stock O ($7,000) Short term Capital gain $1,000 Antiques $3,000 $3,000 Uncaptured sec 1245 Gain $30,000 $30,000 Remaining gain from Rental Property $180,000 $180,000 Stock L $9,000 $9,000 Stock M ($11,000) ($11,000) Long term Capital gain $211,000 $3,000 $30,000 $178,000 Ordinary income of Ron and Anne will increase by $1000 due to short term capital gain. Now the ordinary income is $401,000 Calculation of Tax amount Amount and Type of income Rate Tax Details $18,650 10% $1,865 on the first $18,650 Ordinary Income $57,250 15% $8,587.50 On the next $57250 (75900-18650) Ordinary Income $77,200 25% $19,300 On the next $77200(153100-75900) Ordinary Income $80,250 28% $22,470 On the next $80250(233350-153100) Ordinary Income $167,650 33% $55,324.50 On the next $167650(401000-233350) Ordinary Income $3,000 28% $840 Long term capital gain $30,000 25% $7,500 Long term capital gain $178,000 15% $26,700 Long term capital gain Gross Tax liability $142,587

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.