Jackson, a taxpayer with over $500,000 of taxable income, has the following gains and losses on...
Jackson, a taxpayer with over $500,000 of taxable income, has the following gains and losses on stock transactions in the current year : A $3000 gain on stock held for five months, a $1000 gain on stock held for seven months, a $1500 loss on stock held for five months, a $1000 loss on stock held for 24 months, and a $3000 gain on stock held for 19 months . How much of Jackson’s net capital game is subject to tax at a maximum rate of 20% ?
a. 800
b. 2000
c. 2800
d. 3000
Homework Answers
Answer is Option b) $2,000
The Long term capital gains are taxed separately and it depends on the slab rate . in the given case Jackson is in highest tax bracket tax will be at 20%. Stocks held for more than 24 months qualify as long term capital assets. The loss incurred in one sale can be offset with gain in another sale. Accordingly loss of $1,000 can be offset with $3,000 gain from another sale. The net taxable capital gains is $2,000 and will be taxed at maximum rate of 20%
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