In late December 2015, Bob Mapp suspects that he is in a 28 percent tax bracket.
ID: 2500490 • Letter: I
Question
In late December 2015, Bob Mapp suspects that he is in a 28 percent tax bracket. In prior years he was in the 15 percent tax bracket. After reviewing Bob's figures, you determine on December 15, 2015, that Bob is over the 15 percent threshold by $3,000. Additionally, you know that Bob has made some bad stock investments this year, he is significantly below his pledge to the Piedmont Baptist Church, and you know the state in which Bob lives has a state income tax system. Suggest ways for Bob to drop back into the 15 percent tax bracket.
Explanation / Answer
Bob has some bad stock investments this year and Bob is over the 15 percent threshold by $3,000, now he is in tax bracket of 28%/ To drop back to 15% bob can sell his bad investment upto which he can have capital loss of $3000 which is permissible deduction. So he can drop back to 15% tax bracket in 2015
According to the tax provisions iy your capital losses exceed your capital gains, the amount of the excess loss that you can claim in Form 1040 to lower your income is the lesser of $3,000 or your total net loss.
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