Vivian and Victor have the joint income of $120,000 in 2018. Three years ago they purchased 200 shares of stock at $30 a share. In 2018, they sold the 200 shares for $42 a share. What is the amount of federal income tax they owe as a result of this sale?
The rate at which the taxable person will have to pay on the gain of the long term capital gain is as follows;
Long-Term Capital Gains Tax Rate |
Single Filers (taxable income) |
Married Filing Jointly |
Heads of Household |
Married Filing Separately |
---|---|---|---|---|
0% |
$0-$39,375 |
$0-$78,750 |
$0-$52,750 |
$0-$39,375 |
15% |
$39,376-$434,550 |
$78,751-$488,850 |
$0-$461,700 |
$39,376-$244,425 |
20% |
Over $434,550 |
Over $488,850 |
Over $461,700 |
Over $244,425 |
Assuming that they are married filing jointly and since their joint income is $120000 they will have to pay 15% on the gain on the capitals
Calculation of capital gain = Full value of consideration - cost of acquisition
= (200*42) -(200*30) = 8400 - 6000 = $2400
Total federal income tax on the gain = 2400 * 15% = $360
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