Elaine Case (single with no dependents) has the following transactions in 2016:

Question

Elaine Case (single with no dependents) has the following transactions in 2016: AGI (exclusive of capital gains and losses) $240,000 Long-term capital gain 22,000 Long-term capital loss (8,000) Short-term capital gain 19,000 Short-term capital loss (23,000)

a. Elaine has a net long-term capital gain of $ 14,000 and a net short-term capital loss of $ 4,000 . As a result, she has an overall net capital gain of $ 10,000

b. Complete the letter to Elaine describing how the net capital gain or loss will be treated on her tax return. Assume Elaine's income from other sources puts her in the 39.6% bracket. If required, round your answer to one decimal place.

Hoffman, Young, Raabe, Maloney, & Nellen, CPAs
5191 Natorp Boulevard<
Mason, OH 45040 March 17, 2017 Ms. Elaine Case
300 Ireland Avenue
Shepherdstown, WV 25443 Dear Ms. Case: The purpose of this letter is to discuss the result of your stock transactions for 2016. You had $14000 of long-term capital gains and $4000 of short-term capital losses. Subtracting the $?? of losses from the $ ??? of gains results in a $??? net long-term capital gain. The $??? net long-term capital gain and the details of your stock transactions will be reported on the Schedule D attached to your Form 1040. The $ ??? net capital gain qualifies for the alternative tax on capital gains and will be taxed at a ??? % rate rather than at your marginal tax rate of ??? %. Thank you for the opportunity to be of service. Please call me if you have additional questions. Sincerely, Michelle Brown, CPA
Partner

Explanation / Answer

Form No.8949: Under this form all the securities sale are recorded. It is divided into two parts

Part I----Related to short term securities

Part II---Related to long term securities

Schedule D: Gain and losses reported first in form 8949 and total of this form shown in schedule D.

As Per Federal Tax law alternative tax on long term capital gain will not be more than 20%

Hoffman, Young, Raabe, Maloney, & Nellen, CPAs
5191 Natorp Boulevard<
Mason, OH 45040

March 17, 2017

Ms. Elaine Case
300 Ireland Avenue
Shepherdstown, WV 25443

Dear Ms. Case:

The purpose of this letter is to discuss the result of your stock transactions for 2016. You had $14000 of long-term capital gains and $4000 of short-term capital losses. Subtracting the $4000 of losses from the $ 14000 of gains results in a $10000 net long-term capital gain.

The $10000 net long-term capital gain and the details of your stock transactions will be reported on the Schedule D attached to your Form 1040. The $ 10000 net capital gain qualifies for the alternative tax on capital gains and will be taxed at a 20 % rate rather than at your marginal tax rate of 39.6 %.

Thank you for the opportunity to be of service. Please call me if you have additional questions.

Sincerely,

Michelle Brown, CPA
Partner

Hoffman, Young, Raabe, Maloney, & Nellen, CPAs
5191 Natorp Boulevard<
Mason, OH 45040

March 17, 2017

Ms. Elaine Case
300 Ireland Avenue
Shepherdstown, WV 25443

Dear Ms. Case:

The purpose of this letter is to discuss the result of your stock transactions for 2016. You had $14000 of long-term capital gains and $4000 of short-term capital losses. Subtracting the $4000 of losses from the $ 14000 of gains results in a $10000 net long-term capital gain.

The $10000 net long-term capital gain and the details of your stock transactions will be reported on the Schedule D attached to your Form 1040. The $ 10000 net capital gain qualifies for the alternative tax on capital gains and will be taxed at a 20 % rate rather than at your marginal tax rate of 39.6 %.

Thank you for the opportunity to be of service. Please call me if you have additional questions.

Sincerely,

Michelle Brown, CPA
Partner

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