Question

OTAP a Search this Personal taxes Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information • She received $139,000 in salary. • She received $15,000 of dividend income. • She received $5,500 of interest income on Home Depot bonds. • She received $22,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $5,200, • She received $12,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $7,000. • 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. x1 Open spreadsheet a. What is Mary's federal tax liability? Round your answer to the nearest cent. Do not round intermediate calculations. b. What is her marginal tax rate? Round your answer to 1 decimal place. C. What is her average tax rate? Round your answer to 2 decimal places.

I just need the first picture answered please. idk what more explanation you need.

Answer 1

Computation of Mary's Federal tax liability:

Salary Income- $139000

Interest Income: $5500

Short Term Capital Gains: $5000($12000-$7000)

Income before exemptions and deductions: $149500

Personal Exemption: $4000

Itemised deductions: $7500

Taxable income before LT Capital Gains & DIvidend Income- $ 138000($149500-4000-7500)

Tax Liability on the above Income: $29388

Tax liability on base of bracket: $29227(9225*10%+37450*15%+90750*25%)

Tax liability on excess above the bracket:$161((138000-9225-37450-90750)*28%)

Tax on total Income before LT Capital gains & Dividend Income: $29388

Tax on Dividend Income: $2250(15000*15%)

Tax on Long term capital gains: 2520(16800*15%). Here i assume that the given cost is indexed cost.

Total Tax liability: $34158

The Marignal tax rate is 28%

The Average tax rate is $ 20.12(Total tax liability $34158/Total Income $169800(138000+15000+16800)