Question

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Matt and Meg Comer are married and file a joint tax return. They do not have any children. Matt works as a history professor at a local university and earns a salary of $64,000. Meg works part-time at the same university. She earns $33,000 a year. The couple does not itemize deductions. Other than salary, the Comers’ only other source of income is from the disposition of various capital assets (mostly stocks). (Use the 2019 tax rate schedules, Dividends and Capital Gains Tax Rates.) (Round your final answers to the nearest whole dollar amount.)

a. What is the Comers’ tax liability for 2019 if they report the following capital gains and losses for the year?

Short-term capital gains	$	9,000
Short-term capital losses		(2,000	)
Long-term capital gains		15,000
Long-term capital losses		(6,000	)

Answer 1

Salary (64000+33000)	97000
Net short term capital gain (short term capital gain – short term capital loss = 9000-2000 )	7000
Net long term capital gain (long term capital gain – long term capital loss = 15000-6000	9000
AGI	113000
Standard deduction (For MFJ 2019)	(24400)
Taxable income	88600
Qualified LTCG (preferentially taxed income)	(9000)
Income taxed at ordinary rates	79600
Ordinary Taxes	9229 (9086+(22%*(79600-78950)))
Preferential tax	1350 (9000*15% as taxable income is above the limit of $78750)
Total tax liability	$10579 (ordinary taxes + preferential taxes)