Question

An investor is in the 32 percent tax bracket and pays long-term capital gains taxes of 15 percent. What are the taxes owed (or saved in the case of losses) in the current tax year for each of the following situations?

a) Net short-term capital gains of $3,000; net long-term capital gains of $4,000

b) Net short-term capital gains of $3,000; net long-term capital losses of $4,000

c) Net short-term capital losses of $3,000; net long-term capital gains of $4,000

d) Net short-term capital gains of $3,000; net long-term capital losses of $2,000

e) Net short-term capital losses of $4,000; net long-term capital gains of $3,000

f) Net short-term capital losses of $1,000; net long-term capital losses of $1,500

g) Net short-term capital losses of $3,000; net long-term capital losses of $2,000

Answer 1

capital loss is & uso. solutim (as short term capital gain tax payable 3000 x 32% 960 longterm capital gain tax payable 4000X15). 6oo Total Tax payable 960+600 =$1560 (6) Net capital loss = 3000 +(-4000) - 1000 Taxe saved 1000 X 32" = $ 220 C) Net capital gain – 3000 & 4ooo 1000 capital gain toxe payable 1000 x 15 - $ 150 - short term capital less & Tax rate 3000 x 152. - $ 450 Tax saved The Investor has to pay only $150 as capital gain fand and the tax shelter provided by the short-term

d) Net capital gain = 3800+(-2000) = 1000 capital gain fax payable = 1000x 32) 320 2000 x 32%. Tax saved 2640 The Prvester has to pay only $320 as short-term Capital gains tax, and the tare saved is & 64o. (e) Net capital loss = - 4000 + 3OUD - 1000 Long term capital gain tax saved = 3000 x 15 $ 450 Tax saved a 1000 X 327 $320 Total tard saved 320$770 The Investor tax saved is $770. 450+ 320

The total tax saved is s 960 in the lissent year. 3 Net capital dess = -1000 +(-1900) -2500 Total tone saved = 2500x32% =$800 The Investor has saved tases amounting to $ 800 (9) Net capital loss= - 3000+ - (2000) SOUD Total tax saved in current year= 3000x32% $960