Question

In 2020, Tom and Amanda Jackson (married filing jointly) have $200,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) a. On May 12, 2020, they sold a painting (art) for $110,000 that was inherited from Grandma on July 23, 2018. The fair market value on the date of Grandma's death was $90,000 and Grandma's adjusted basis of the painting was $25,000. b. They applied a long-term capital loss carryover from 2019 of $10,000. c. They recognized a $12,000 loss on the 11/1/2020 sale of bonds (acquired on 5/12/2010). d. They recognized a $4,000 gain on the 12/12/2020 sale of IBM stock (acquired on 2/5/2020). e. They recognized a $17,000 gain on the 10/17/2020 sale of rental property (the only $1231 transaction), of which $8,000 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,000 is subject to the O/15/20 percent maximum rates (the property was acquired on 8/2/2014). f. They recognized a $12,000 loss on the 12/20/2020 sale of bonds (acquired on 1/18/2020). g. They recognized a $7,000 gain on the 6/27/2020 sale of BH stock (acquired on 7/30/2011). h. They recognized an $11,000 loss on the 6/13/2020 sale of QuikCo stock (acquired on 3/20/2013). i. They received $500 of qualified dividends on 7/15/2020. After completing the required capital gains netting procedures, what will be the Jacksons' 2020 tax liability? (Do not round intermediate calculations.) Total tax liability

Answer 1

ST	LT
	28%	25%	0/15/20%
(d) 4000	(a) 20000	(e) 8000	(c) (12000)
(f) (12000)	(b) (10000)		(e) 9000
			(g) 7000
			(h) (11000)
(8000)	10000	8000	(7000)
	(7000)		7000
(8000)	3000	8000	0
8000	(3000)	(5000)
0	0	3000	0

110000-90000 =20000

Taxable income

Taxable Income before the events	200000
Qualified Dividend	500
LTCG 25%	3000
Taxable income	203500

2020 tax liability

Tax on ordinary income: 200000	36159 (29211+(24%*(200000-171050)))
Capital gains:
LTCG 25%: (30 00*24%)	720
Dividends:(15% *500)	7500
Total tax liability	44379