Harold and Wanda (married filing jointly) have $30,000 ordinary income after the

Question

Harold and Wanda (married filing jointly) have $30,000 ordinary income after the standard deduction and personal exemptions, and $50,000 in unrecaptured depreciation on the sale of rental property, for total taxable income of $80,000. For 2014, the 10 percent tax bracket for married taxpayers filing jointly ends at $18,150, the next $55,650 in taxable income is taxed at 15 percent, and 25 percent applies to the next $75,050. What is Harold and Wanda's tax? (Please use the percentages given in this problem to calculate your answer.) a. $7,500 b. $11,093 c. $11,713 d. $16,093

Explanation / Answer

Answer is d. $16,093

10 percent tax bracket for married taxpayers filing jointly ends at $18,150 1815 next $55,650 in taxable income is taxed at 15 percent(30000-18150)*.15 1777.5 Unrecaptured Section 1250 income is taxed at a 25% maximum capital-gains rate 50000*.25 12500 tax Payable 16092.5

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