Question

Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information: She received $90,000 in salary. • She received $11,000 of dividend income. She received $6,200 of interest income on Home Depot bonds. She received $22,500 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $5,300. She received $10,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $4,700. • Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Answer 1

Required a Mary's tax liability calculation Amount partialan Salary $ 90,000 Dividend income $ 11000 Interest Income $6200 $17200 protit from salat Disney shock C$22500 - $5300) protit from sale of google ($10500 - $4700) stock 5800 les Deduction Exemption compeyer ($4000) I temized deduction ($7500) bug Pap liability $ 118700

Required b Marginal far vale Table 3.5 Taxer rates based on Taxablincome Amount paid On base percentage Excess over base $ 0.00 $ 0.00 10.00% $9225.00 &922.50 15.00% $37450.00 $5156.25 25.00% $90750.00 $18481.25 28.00% $189750.00 $46075.25 33-00% $411500.00 $119401:25 35.00% $413200.00 $ 119996.25 39.60% As per above maoy's calls in the bracket of $90750.00 to $189.750.00 so, there fore marginal tax rate is 28%

Required c Average fox rate Tax payable Taxable income ( fax payable $18481.25+ ($118700-$90750) x 28%. = $18481.25 + $ 7826 $ 26307.25 Average tax rate = $26307.25 = 22.16% $ 118 700 Gubig