Question

1. PR.02-18 Income Concepts (LO. 4) 2. PR.02-23 Chelsea, who is single, purchases land for investment purposes in 2014 at a cost of $22,000. In 2019, she sells the land for $38,000. Chelsea's taxable income without considering the land sale is $100,000. What is the effect of the sale of the land on her taxable income, and what is her tax liability? 3. PR.02-26 Refer to the tax rate schedule for calculations. 4. PR.02-28 Round all calculations to two decimal places. Assume a long-term capital gains tax rate of 15%. 5. PR.02-33 The effect of the sale of land is that it increases her taxable income by the amount of the capital gain . Her taxable income is $ and 6. PR.02-38 her tax liability is $ 7. PR.02-40.ALGO Feedback 8. PR.02-41 Check My Work 9. PR.02-43 Capital asset - Any asset that is not a receivable, inventory, real or depreciable property used in a trade or business, and certain intangible assets, such as copyrights. Common capital assets of individuals include stocks, bonds, and personal use assets. 10. PR.02-44

Answer 1

Solution: Her Taxable Income is $ 103,800 and her tax liability is $ 17,646.50.

Income	$             100,000
Long Term Capital Gain	$                16,000
Annual Gross Income	$             116,000
Standard Deduction,2019	$             (12,200)
Taxable Income	$             103,800

Particulars	Taxable Income	Tax liability	Calculation
Ordinary Income ($103,800 - $ 16,000)	$                87,800	$ 15,246.50	14382.50 +(87800-84200)*24%
Long Term Capital Gain	$                16,000	$    2,400.00	16000*15%
Total	$             103,800	$ 17,646.50