Question

How do I solve b. and c.?

ary 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 $120,000 in salary. • She received $19,000 of dividend income. . She received $3,900 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 $9,300. • She received $8,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,900 . Mary only has allowable itemized deductions of $5,900, so she will take the standard deduction of $12,000 will be deducted from her gross income to determine her taxable Income Assume that her tax rates are based on Table 3.5. a. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent. $ 140800 b. What is her marginal tax rate? Do not round Intermediate calculations. Round your answer to one decimal place. c. What is her average tax rate? Do not round Intermediate calculations. Round your answer to two decimal places.

Answer 1

Under 2020 tax rate slabs

Calculation of taxable income and tax liability

Particulars	Amount($)	.
Gross salary	120000
Dividend income	19000
Interest	3900
Short term capital gain	2600	SALE PRICE - COST =($8500-$5900)= $2600
Income before exemption and deduction	145500
less standard deduction	-12000
Taxable income before Lt gain And Dividends	133500
Taxes on Taxable income before LT Gain and dividends :
18538.5 + (163300-85525)*32%
Tax liability on base bracket	14605.5
Tax liability on excess over base@24%	47975*24% =11514	$133500-$85525=$47975
Taxe on Taxable income before LT Gain and dividends	$26119.5	=14605.5+11514
Taxes on LT Gain and :
Lt gain	13200	sale -cost =(22500-9300)=13200
Tax on LT Gain and @15%	1980
total federal tax liability	$28100	=26119.5+ 1980

( A) federal tax liability =$28100

( B) Marginal tax rate = 24%

(c) average tax rate = total tax / total taxable income

= 28100 /(133500 +13200 )*100

= 28100 / 146700

=19.15%