Question

Casey recently sold his qualified small business stock for $83,000 after holding it for 10 years. His basis in the stock is $47,000. Applying the rules as if the stock were acquired in 2020 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?

Multiple Choice

• $2,700.

• $5,040.

• $5,400.

• $10,080.

Answer 1

Answer
Option B is Correct
Supporting calculations:
Qualified Business Stock	$      83,000
Less: Basis of Stock	-$      47,000
Realized Gain	$      36,000
Less: 50% of the gain on qualified business stock ($36,000*50/100)	-$      18,000
Taxable Income	$      18,000
Taxable Rate	28%
Tax Owe on the Sale ($18,000*28/100)	$        5,040