Question

During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.)

Capital Asset	Market Value		Tax Basis		Holding Period
L stock	$	50,000	$	41,000	> 1 year
M stock		28,000		39,000	> 1 year
N stock		30,000		22,000	< 1 year
O stock		26,000		33,000	< 1 year
Antiques		7,000		4,000	> 1 year
Rental home		300,000*		90,000	> 1 year

*$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property).

Ignore the Net Investment Income Tax.

b. Given that Ron and Anne have taxable income of $400,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2020 assuming they file a joint return? (Round all your intermediate computations to the nearest whole dollar amount.)

Tax Rates for Net Capital Gains and Qualified Dividends

Rate*	Taxable Income
	Married Filing Jointly	Married Filing Separately	Single	Head of Household	Trusts and Estates
0%	$0 - $80,000	$0 - $40,000	$0 - $40,000	$0 - $53,600	$0 - $2,650
15%	$80,001 - $496,600	$40,001 - $248,300	$40,001 - $441,450	$53,601 - $469,050	$2,651 - $13,150
20%	$496,601+	$248,301+	$441,451+	$469,051+	$13,151+

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$          0	$ 19,750	10% of taxable income
$ 19,750	$ 80,250	$1,975 plus 12% of the excess over $19,750
$ 80,250	$171,050	$9,235 plus 22% of the excess over $80,250
$171,050	$326,600	$29,211 plus 24% of the excess over $171,050
$326,600	$414,700	$66,543 plus 32% of the excess over $326,600
$414,700	$622,050	$94,735 plus 35% of the excess over $414,700
$622,050	—	$167,307.50 plus 37% of the excess over $622,050

Answer 1

a).

Capital asset	market value($)	Tax Basis($)	Tax gain($)
L stock	50,000	41,000	9,000
M stock	28,000	39,000	(11,000)
N stock	30,000	22,000	8000
O stock	26,000	33,000	(7000)
Antiques	7,000	4,000	3000
Rental	300,000	90,000	210,000
Tax liability as per schedule Y1			29,211
Excess income over ($ 171,050)			116,885
Tax in above @24%			28,076

b).

Capital asset	market value($)	tax basis($)	tax($) gain
L stock	50,000	41,000	9000
M stock	28,000	39,000	(11,000)
N stock	30,000	22,000	8000
O stock	26,000	33,000	(7,000)
Antiques	7,000	4,000	3000
Rental	300,000	90,000	212,000
Other income	400,000		400,000
Tax liability as per schedule Y1			94,735
Excess income over ($414,700)			308,443
Tax in above @35%			107,955