Question

. She received $131,000 in salary. . She received $12.500 of dividend income. She received $6,200 of interest income on Home Depot bonds. • She received $21.000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $5,300. . She received $13,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $4.900. • Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below Open spreadsheet a. What is Mary's federal tax liability? Round your answer to the nearest cent. Do no your answer to the nearest cent. Do not found intermediate calculations b. What is her marginal tax rate? Round your answer to I decimal place, 28 c. What is her average tax rate Round your answer to 2 decimal places Check My Work Retrobem

Answer 1

Calculation of federal Tax liability

Particulars	Amount($)
Gross salary	131000
Interest	6200	Home depot Bonds
Short term capital gain	8100	SALE PRICE - COST =($13000-$4900)= $8100
Income before exemption and deduction	145300
less personal exemption	-4000
less itemized deduction	-7500
Taxable income before Lt gain And Dividends	133800
Taxes on Taxable income before LT Gain and dividends :
Tax liability on base bracket	18481.25	upto $90750
Tax liability on excess over base@28%	12054	$133800-$90750=$43050
Tax on Taxable income before LT Gain and dividends	30535.25
Taxes on LT Gain and dividends :
Lt gain	15700	sale -cost =(21000-5300)=15700
dividends	12500
	28200
Tax on LT Gain and dividends :@15%	4230
total federal tax liability	$ 34765.25	=30535.25 +4230
Average tax rate	34765.25/162000*100 =21.46%	total federal tax liability / Total TAxable income Total taxable income = 133800+28200 =162000