5. Worth is single and has no dependents. Without considering his $16,000 adjust

Question

5.         Worth is single and has no dependents. Without considering his $16,000 adjusted net capital gain (ANCG), his taxable income, which includes no investment income, in 2015 is as follows:

the 2015 taxable income data

AGI $245,000

Home mortgage interest $22,000

State and local income taxes 8,400

Charitable contributions 7,400

Personal exemption 4,000   41,800

Taxable income   $203,200

Requirements

a. What is Worth's tax liability without the ANCG?

b. What is Worth's tax liability with the ANCG?

(Do not round intermediary calculations. Enter the amount you input in the cell to the nearest cent.)

(Do not round intermediary calculations. Enter the amount you input in the cell to the nearest cent.)

Explanation / Answer

Solution :

a) If the taxable income is between $ 189,301 - $ 411,500 then the tax due is = $ 46,075.25 + 33% of the amount over $ 189,300

Worth's tax liability without the ANCG = $ 46,075.25 + 0.33 X $ 13,900

Worth's tax liability without the ANCG = $ 50,662.25

b) Worth's tax liability with the ANCG = $ 46,075.25 + 0.33 X $ 29,900

Worth's tax liability with the ANCG = $ 55,942.25

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