Question

Required information The following information applies to the questions displayed below.) During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules) Capital Asset L stock M stock N stock Ostock Antiques Rental hone Market Value $ 53,000 31,000 33.000 29.000 10.099 303,00 Tax Basis $42, see 40,500 23.500 34,500 5,500 91,500 Holding Period > 1 year > 1 year < 1 year < 1 year > 1 year "$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property). Ignore the Net Investment Income Tax. a. Given that Ron and Anne have taxable income of only $23,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2019 assuming they file a joint return? (Round all your intermediate computations to the nearest whole dollar amount.) Gross tax liability

Answer 1

Calculation of net taxable income of Mr. R & M A is as follows : Short-term lovg-term cougate Description Investment investment (Total) long term investment long term invest- long term ment at 25% investment 15 % IN Stock 89,500 Lostock - $5,500 Step-1 $4,000 $4,oo $ 4,500 Autiques lon- recaptured Jafn $ 30,000 $30,000 Gain from $ 181,500 rental $ 181,500 L Stock $ 10,500 $ 10,500 IM Stock - $ 9.500 - $9,500 Step a $ 217.000 step 4 land 6 $184,500 Step 6 Step 7 $ 4,500 Step 8 $ 30,000 Summary $4,000 $ 4,500 $ 30,000 $ 182, Soo

Schedule of income brackets and tax rate for joint filing it If taxable income is : . The tax is : | 10% of the taxable income not over $ 19,400 over $19,400 but not over $ 78,950 over $78,950 but not over $ 168, 4oo lover 168, 400 but not over $ 321,450 over 321,450 but not over $ 408, 200 over $408, 200 but not over $ 612,350 over $612,350 $ 1940 plus 12% of excess over $19,400 $9,086 plus 22% of the excess lover $78, 950 28,765 plus 24% of the excess over $ 168,400 $65,497 Plus 32% of the excess over $324450 $93,257 plus 35% of the excess Ovex $ 408, 200 $164, 709.50 plus 37% of excess over $612, 350

Calculation of new a Add New short textu Alation of new short term capital gains : Ordinary taxable income : $23,000 Short term capital gain : $4,000 dow short term capital gain " $27,000 oss tax liability of Mr. R & Ms. A, ip ordinary tax liability to а к се Iw Experation / Tax CB чее об ҳис оме and amount | $ 19,400 (ordinary Rate 10% $1,940 $912 $ 4,500 $ 7,600 fondivary) 12% 1830,000 (capital | 15% gain 25%) $ 4,500 (capital | 15% gain 28% ) $675 10%, 15%, 20% rate Reger Schedule of brackets and tax rate for joint filing Thefer Schedule of brackets and tax note for joint filing Refer Schedule of brackets and tax rate for joint filing Refer Schedule of brackets and tax sate for joint filling Particular Amount ($ [first base 78, ISO less! Ordivary income 1000) 25% capital gain (30,000) 284. Capital gain (64.500) lot, 15 t, 204, sate capital gain 117,250 The amount of of, 15%, 2014, rote capital gain will be tatable for newalvive ist. brackets. Terefore, it should be charge at of The remaining of $(182,500 - $ 17,2501 will be taxed at 15% capital gain of 10% $0. $ 165,250 1 15% 524788 Gross Tax liability $32,815

Gross tax liability of Mr. R & Mr. A, if the ordinary tax liability is 23,000. Answer: Gross Tax liability is [$32,815 | working Notes: In this case ordinary taxable income of Mr. R & Mr. A is $23,000 plus $4,000 short term capital gain.