John Jones is unmarried with no dependents. During the year he sold common stock

Question

John Jones is unmarried with no dependents. During the year he sold common stock in the following companies Company 540shs Salad, Inc 140SHS Greed Corp 700shs XYZ Corp Date acquired 05/07/2015 04/21/2009 12/11/1998 Cost $11,175 $6,458 $17,750 Date sold 02/17/2016 09/09/2016 12/12/2016 Sales price $12,345 $6,085 $23,024 John carried over a long-term capital loss of S3,500 from 2015. His taxable wages were S75,993 in 2016. His employer withheld S9,825 for federal taxes. John's only other income during the year were S756 of bank interest and $450 of state bond interest. Although he is an active participant in his employer's 401K plan, in November he contributed $2,500 to his traditional IRA Determine John's tax owed or tax refund for 2016.

Explanation / Answer

Company Date Acquried Cost Date sold sales price Gain / Loss 540shs Salads inc 5/7/2015 $11,175 2/17/2016 $12,343 $1,168 140SHS Greed Corporation 4/21/2009 $6,458 9/9/2016 $6,085 ($373) 700 sHS XYZ Corp 12/11/1998 $17,750 12/12/2016 $23,024 $5,274 Total Gain $6,069 (Refer 1) Long Term Capital Gain $6,069 Long Term Capital Loss $3,500 Total Gain and Loss $2,569 The tax on most other investments is at a preferential rate of 0%, 15%, or 20%, depending on the tax rate that would be assessed on the same amount of ordinary income. (Qualified dividends receive the same preference.) Tere fore Ordinary tax bracket for Jone Is $37,951–$91,900 And Capital Gain Tax for this tax barcket is 15% $385 Long term capital gain tax $385 Refer2 Taxable Wages $75,993 Active Participant 401 K Plan in november $2,500 $73,493 (Taxable income-$37950)*25% $8,886      Tax $8,886 employer Withheld federal taxes $9,825 Net Income tax (Withheld federal tax- Actual Tax) $939 Refer 3 Total Tax $1,325 By2&3 Tax Deductible Schedule B (Form 1040A or 1040)over $1,500 of taxable interest or ordinary dividends. Only other income bank interest $756 State Bond interest $450 $1,206

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