you are in the 28% income tax bracket and pay long term capital gains taxes of 1
ID: 2668543 • Letter: Y
Question
you are in the 28% income tax bracket and pay long term capital gains taxes of 15% .what are the taxes owed or saved in the current year for each of the following sets of transactions:a) You buy 100 shares of ZYX for $10 and after 7 months sell it on December 31,200x for $23.you buy 100 shares of WER for $10 and after 15 months on December 31,200x for $7.you buy 100 shares of DFG for $10 and after 9 months on December 31,200x it is selling for $15
b) You buy 100 shares of zyx for $60 and after 7 months sell it on December 31, 200y for $37.you buy 100 shares of WER for $60 and after 15 months sell it on December 31,200y for $67. You buy 100 shares of DFG for $60 and after 9 months sell it on December 31,200y for $76
c) On januarry 2,200x you buy 100 shares of ZYX for $40 and sell it for $31 after 22 months.on januarry 2,200x you buy 100 shares of WER for $40 and sell it for $27 after 15 months.on January 2,200x you buy 100 shares of DFG for $40 and sell it for $16 after 18 months
d) On January 2,200x you buy 100 shares of ZYX for $60 .on October 2,200x you sell 100 shares of ZYX for $40.on October 10, 200x you purchase 100 shares of zyx for 25
Explanation / Answer
you are in the 28% income tax bracket and pay long term capital gains taxes of 15% .what are the taxes owed or saved in the current year for each of the following sets of transactions:
a) You buy 100 shares of ZYX for $10 and after 7 months sell it on December 31,200x for $23.you buy 100 shares of WER for $10 and after 15 months on December 31,200x for $7.you buy 100 shares of DFG for $10 and after 9 months on December 31,200x it is selling for $15
ZYX is a short term capital gain of (23-10)*100 = 1,300
WER is a long term capital loss of (10-7)*3 = 300
DFG has not been sold yet.
Since a net short-term capital gain may be offset by a net long-term capital loss, this results in a net short-term capital gain of 1,300 – 1,000 = 1,000, resulting in a tax savings of 1,000*0.28 = 280
b) You buy 100 shares of zyx for $60 and after 7 months sell it on December 31, 200y for $37.you buy 100 shares of WER for $60 and after 15 months sell it on December 31,200y for $67. You buy 100 shares of DFG for $60 and after 9 months sell it on December 31,200y for $76
ZYX is a short term capital loss of (60-37)*100 = 2,300
WER is a long-term capital gain of (67-60)*100 = 700
DFG is a short-term capital gain of (76-60)*100 = 1,600
Combining DFG and ZYS, results in a net short-term capital loss (net STCL) of 700.
You have a net long-term capital gain (net LTCG) of 700 from WER.
Net capital gain = net LTCG over net STCL, which in this case is 700-700 = 0, so no taxes owed or saved.
c) On januarry 2,200x you buy 100 shares of ZYX for $40 and sell it for $31 after 22 months.on januarry 2,200x you buy 100 shares of WER for $40 and sell it for $27 after 15 months.on January 2,200x you buy 100 shares of DFG for $40 and sell it for $16 after 18 months
In the year they were bought, there would be no taxes saved or owed since nothing was sold.
If the year when they are sold, ZYX would be a 900 long term capital loss, WER would be a 1,300 long term capital loss, and DFG would be a 2,400 long term capital loss. Total long term capital losses equal 4600. There is a limit of 3000 to offsetting ordinary income with a capital loss, and then the rest is then carried over. The savings for this year would be 3000*0.28 = 840, assuming there is income to offset. (if you are MFS, it is only 1,500*0.28 = 420) So this would be a savings of $840 in the year they are sold as long as you have income to offset and are not MFS. Also, even if you don’t have other income to offset, you still need to recognize the $3,000 loss and reduce your carryover amount .
d) On January 2,200x you buy 100 shares of ZYX for $60 .on October 2,200x you sell 100 shares of ZYX for $40.on October 10, 200x you purchase 100 shares of zyx for 25
Since it was repurchased only 8 days later, this is a wash sale and the loss is not recognized. No taxes owed or saved.
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