Question

Word File Edit View Insert Format Tools Table Window Help w tax question * 100% 67 Wed 10:18 PM Q Q Search in Document + Share Home Insert Draw Design Layout References Mailings Review View Times New R... 11 - A- A- Aa A 1 AabbaDdEe Aabbcode AaBbCcDc AaBbCcDdEt AaBb AaBb CcDdEx Aalbode Paste I U abe Xx? Α και Normal No Spacing Heading 1 Heading 2 Subtitle Subtle Emph... Styles Pane CS |Angelica has the following capital gains and losses during the current year: Short-term capital loss $(10,000) Collectibles loss (4,000) Long-term capital gain 5,000 Qualified dividend income 10,000 If Angelica's marginal tax rate is 32%, what is the effect of the transactions given above on her taxable income and income tax liability? Income Tax Liability a. $1,000 increase $ 280 increase b. $7,000 increase $ 540 increase c. $1,000 increase $320 increase d. $7,000 increase $1,050 increase e. $1,000 increase $ 150 increase PM Page 1 of 1 82 words English (United States) O Focus 210% TO A W P N tv

Answer 1

The answer to this question may vary depending upon the Tax Laws of the countries to which the questioner referrs to and the Assessment Year to which it relates to.

However as per the Indian Income Tax Laws, option C. is the right answer. Following is the explanation

Particulars		Rs.	Rs.
Long Term Capital Gain	5000
Less: Short Term Capital Loss	-5000	0
set off to the extent of
Long Term Capital Gain
Short Term Capital Loss balance		-5000
Collectible Loss			-4000
Qualified Dividend Income		10000
	Total Increase		1000
Marginal Tax Rate	at 32%		320