In November 2014, Ben and Betty (married, filing jointly) have a long-term capit

Question

In November 2014, Ben and Betty (married, filing jointly) have a long-term capital gain of $50,000 on the sale of stock. They have no other capital gains and losses for the year. Their ordinary income for the year after the standard deduction and personal exemptions is $72,500, making their total taxable income for the year $122,500 ($72,500 + $50,000). In 2014, married taxpayers pay 10 percent on taxable income up to $18,150, 15 percent on the next $55,650, and 25 percent on the next $75,050 of taxable income. What will be their 2014 total tax liability assuming a tax of $9,971 on the $72,500 of ordinary income?

a. $9,971 b. $18,375 c. $17,471 d. $22,338

Explanation / Answer

c. $17,471

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