Question

Hi I am having trouble with this problem. Will you please walk me through?

Capital Gains and Losses (LO. 4)

Rollie has the following capital gains and losses during the current year:

Short-term capital gain $3,000 Collectibles gain 4,000 Long-term capital gain 11,000 Long-term capital loss 6,000

Assume Rollie's marginal tax rate is 24%.

Rollie is married and has a taxable income of $175,000 before considering the effect of his capital gains and losses.

Refer to Table 11-1 and the Tax Rate Schedules to answer the following questions.

What is the effect of Rollie's capital gains and losses on his taxable income and his income tax liability?

Rollie has a $ short-term capital   and a $ long-term capital   . This results in   his taxable income to $.

Rollie's income tax liability   by $.

Answer 1

Rollie Has a
Short-term capital gain	3,000
Long term Gain:
Long-term capital gain	11,000
Long-term capital loss	-6,000
Collectibles gain	4,000
Net long-term capital gain	9,000
Taxable Income
Gross Income	1,75,000
Add:  Net Long term capital	9,000
Taxable income	1,84,000
Tax liability
Tax on short-term capital gain - $3,000 x 24%	720
Tax on adjusted net capital gain - ($9000 - $4,000 )x 15%	750
Tax on collectibles gain = $4000 x 24%	960
Rollie's income tax liability	2430