Solution :-
Purchase Price of OCL shares ( 5000* $2.00) = $10,000
Purchase Price of MHL share ( 2000* $3.00) = $ 6,000
Sale Price of OCL shares ( 5000* $3.00) = $ 15000
Sale Price of MHL shares ( 2000* $4.50) = $9,000
Profit on sale of OCL shares = $ 15,000- $ 10,000
= $ 5,000
Profit on sale of MHL shares = $ 9,000- $ 6,000
= $ 3,000
Tax Rate Applicable = 32.5% { note :- 1 }
Thus,
The tax payable on the transaction is closest to = ($5,000 + $3,000)*32.5%
= $ 2,600
Option (d) is correct.
Note.
1. The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify. In essence, the marginal tax rate is the percentage taken from your next dollar of taxable income above a pre-defined income threshold.
Where,The average tax rate is the total amount of tax divided by total income. For example, if a household has a total income of $100,000 and pays taxes of $15,000, the household's average tax rate is 15 percent.
Thus, In the given question the marginal tax rate for the transaction is 32.5% which is more appropriate to use instead of Average tax rate.
B3. On 21 August 2017, Martha bought 5000 shares in Orb Casinos Ltd (OCL) at $2.00...
Jen bought 100 shares of ABC stock at $15 a share on July 14, 2017. On August 7, 2018, she noticed that the stock had increased in value to $20 a share and decided to sell her shares. Jen's marginal tax rate is 22%. How is the revenue from the sale treated on her 2018 income tax return?
Jen bought 100 shares of ABC stock at $15 a share on July 14, 2017. On August 7, 2018, she noticed that the stock had increased in value to $20 a share and decided to sell her shares. Jen's marginal tax rate is 22%. How is the revenue from the sale treated on her 2018 income tax return?
Jen bought 100 shares of ABC stock at $15 a share on July 14, 2017. On August 7, 2018, she noticed that the stock had increased in value to $20 a share and decided to sell her shares. Jen's marginal tax rate is 22%. How is the revenue from the sale treated on her 2018 income tax return? A) Her AGI will increase by $2,000, and this $2,000 will be taxed at her regular marginal rate of 22%. B) Her...