Question

Henrich is a single taxpayer. In 2019, his taxable income is $454,500. What is his income tax and net investment income tax liability in each of the following alternative scenarios?

His $454,500 of taxable income includes $48,000 of long-term capital gain that is taxed at preferential rates. Note: some of his preferentially taxed income will be in the 15% bracket and some in the 20% bracket.

What is the Income tax?

What is the Net investment income tax?

What is the Total tax liability?

Answer 1

	Taxable income	454500
	Long term capital gain	48000
	For single tax payer	Rate 20% over 434550 taxable income
	Tax liability
	Federal rates
Slab	204100-510300	46628 plus 35% over 204100
	Taxable income under federal taxes	406500
	Income over 204100	=406500-204100
		202400
	Rate	35%
	Tax	70840
	Total tax	=46628+70840
		117468
	Tax on long term capital gains
	Capital gains	48000
	Rate	20%
	Tax	9600
	Income tax	117468
	Net investment income tax	9600
	Total tax liability	127068