Question

 Thomas purchased 200 shares of stock A for ​$11 a share and sold them more than a year later for $ 9 per share. He purchased 700 shares of stock B for ​$41 per share and sold them for ​$53 per share after holding them for more than a year. Both of the sales were in the same year. If Thomas is in a 25​% tax​ bracket, what will his capital gains tax be for the​ year? If Thomas is in a 25​% tax​ bracket, his capital gains tax for the year is ​$?

Answer 1

For stocks of A

Profit = (selling price - purchasing price) x units
Profit = ($9 - $11) x 200
Profit = -$400
Hence a loss of $400

For stock of B

Profit = (selling price - purchasing price) x units
Profit = ($53 - $41) x 700
Profit = $8.400

As both the sales were in the same year, we'll sum them to arrive at capital gains for tax calculation

Total profit = Profit from stock A + Profit from stock B
Total profit = -400 + 8,400
Total profit = $8,000

Hence capital gains for the year = $8,000

As the tax rate is 25%.
Capital gains tax = Capital gains x tax rate
Capital gains tax = 8,000 x 25%
Capital gains tax = $2,500

Hence capital gains tax for the year is $2,500