Question

Michael is in the 32% marginal tax bracket. He recently sold a gold coin for $12,000...

Michael is in the 32% marginal tax bracket. He recently sold a gold coin for $12,000 that he purchased six months ago for $2,000. How much federal income tax will Michael pay on this transaction?

a. $1,000.

b. $1,500.

c. $2,800.

d. $3,200.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option D i.e. $3200

Calculation of Taxable amount of Gold Coin

​​​​​​Proceeds from sale of Gold Coin $12000

Less: Cost of Gold Coin ($2000)

​​​​​Taxable amount of Gold Coin (Short term)   $10000

Tax on Profit on Gold Coin @32% $3200

​​​​​Above Amount should be taxed under Short Term Capital g Gain because its holding period is less than 12 monthsor 1 year but in Federal tax scheme short term Capital gain is taxable at normal rate of of tax.

In this case, normal rate is 32 % or marginal tax bracket given in the problem.Therefore $3200 is the amount of tax on this short term Capital gain.

​​​​​​

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Victor is a single taxpayer in the 24% marginal tax bracket. In 2019, he sold stock...
Victor is a single taxpayer in the 24% marginal tax bracket. In 2019, he sold stock shares for a long-term capital gain of $8,500. He also sold some financial services stock for a long-term capital loss of $2,000. In addition, he sold the home that he had lived in for the past 3 years and experienced a $15,000 gain on the house. 1. He has a net taxable long-term capital_____ (fill gain or loss in this blank) for the year...
Julio is in the 32% tax bracket. He acquired 2,000 shares of stock in Gray Corporation...
Julio is in the 32% tax bracket. He acquired 2,000 shares of stock in Gray Corporation seven years ago at a cost of $50 per share. In the current year, Julio received a payment of $150,000 from Gray Corporation in exchange for 1,000 of his shares in Gray. Gray has E & P of $1,000,000. Julio has a capital loss carryover of $50,000 in the current tax year. Julio has no other capital gain transactions during the year. Assume that...
Linda​ Babeu, who is in a​ 33% ordinary tax bracket​ (federal and state​ combined) and pays...
Linda​ Babeu, who is in a​ 33% ordinary tax bracket​ (federal and state​ combined) and pays a 15​% capital gains rate on dividends and capital gains for holding periods longer than 12​ months, purchased 10 options contracts for a total cost of $ 2,800 just over one year ago. Linda netted ​$3,600 upon the sale of the 10 contracts today. What are​ Linda's pretax and​ after-tax HPRs on this​ transaction? ​Linda's pretax HPR on this transaction is_​%. Linda's after-tax HPR...
Roger, who is in the 32% marginal tax bracket, must decide between two investment opportunities, both...
Roger, who is in the 32% marginal tax bracket, must decide between two investment opportunities, both of which require an initial cash outlay of $60,000 at the beginning of year 1. Investment A: This investment will yield $9,000 before-tax cash flow at the end of years 1, 2 and 3. This cash represents ordinary taxable income. At the end of year 3, Roger can liquidate the investment and recover his $60,000 cash outlay. He must pay a nondeductible (for tax...
During the year, Inez, a single individual, recorded the following transactions involving capital assets. Gain on...
During the year, Inez, a single individual, recorded the following transactions involving capital assets. Gain on the sale of unimproved land (held as an investment for 3 years) $3,000 Loss on the sale of a camper (purchased 2 years ago and used for family vacations) (5,000) Gain on the sale of ADM stock (purchased 9 months ago as an investment) 4,000 Gain on the sale of a fishing boat and trailer (acquired 18 months ago at an auction and used...
Problem 5-55 (LO. 3) How does the tax benefit rule apply in the following cases? a....
Problem 5-55 (LO. 3) How does the tax benefit rule apply in the following cases? a. In 2015, the Orange Furniture Store, an accrual method taxpayer, sold furniture on credit for $1,000 to Sammy. The cost of the furniture was $600. In 2016, Orange took a bad debt deduction for the $1,000. In 2017, Sammy inherited some money and paid Orange the $1,000 he owed. Orange was in the 35% marginal tax bracket in 2015, the 15% marginal tax bracket...
Mike and Julie Bedard are a working couple. They will file a joint income tax return....
Mike and Julie Bedard are a working couple. They will file a joint income tax return. This year they have the following taxable​ income: 1. ​$126,000 from salary and wages​ (ordinary income). 2. ​$3,000 in interest income. 3. ​$3,000 in dividend income. 4. ​$5,000 in profit from sale of a stock they purchased 2 years ago. 5. ​$1,000 in profit from a stock they purchased this year and sold this year. Use the federal income tax rates given in Table​...
Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley...
Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley has owned each of the assets since he began the business. In the current year, Buckley sold the following business assets: Asset Accumulated Original Cost Depreciation Gain/Loss Computers $ 6,000 $ 2,000 $ (3,000) Machinery 10,000 4,000 (2,000) Furniture 20,000 12,000 7,000 Building 100,000 10,000 (1,000) Assuming Buckley’s marginal ordinary income tax rate is 32 percent, answer the questions for the following alternative scenarios:...
ACC312 Federal Taxation Tax avoidance/Tax evasion For each of the following situations, discuss whether the individual...
ACC312 Federal Taxation Tax avoidance/Tax evasion For each of the following situations, discuss whether the individual is engaging in tax avoidance or tax evasion. a. Mr. L performed minor construction work for a number of people who paid him in cash. Because Mr. L knows that there is almost no chance that the IRS could learn of these payments, he reports only half the payments as income on his federal tax return. b. Mr P, who is in the 39.6...
- Esterina redeemed EE bonds which qualify for the educational exclusion. The redemption consisted of $12,000...
- Esterina redeemed EE bonds which qualify for the educational exclusion. The redemption consisted of $12,000 principal and $4,000 interest. The net qualifying educational expenses are $10,000. Her AGI is below the threshold for phase-out of the exclusion. The taxable interest is A) $0. B) $1,500. C) $2,400. D) $3,000. - In December 2018, Tatiana, a cash-basis taxpayer, rents an apartment to Hakeem. Tatiana receives both the first and last months' rent totaling $2,000 plus a security deposit of $500....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT