Question

Required information [The following information applies to the questions displayed below.] 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 $63,850. Meg works part-time at the same university. She earns $33,150 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 tax rate schedules, Dividends and Capital Gains Tax Rates.) (Round your final answers to the nearest whole dollar amount.) b. What is the Comers’ tax liability for 2019 if they report the following capital gains and losses for the year? Short-term capital gains $ 1,500 Short-term capital losses 0 Long-term capital gains 13,060 Long-term capital losses (10,030 )

Answer 1

Solution:

Calculation of Taxable Income:

Particulars	Amount
Salary	63,850
Net short gain	1,500
Net long gain	3,030
AGI	68,380
Standard deduction	12,700
Personal exemption	8,100
Taxable income	47,580
Qualified LTCG	3,030
Income taxed at ordinary rate	44,550

Working Notes:

Net short gain = 1,500 - 0 = 1,500

Net long gain = 13,060 - 10,030 = 3,030

Computation of Tax Liability:

= (18,650 * 10/100) + {(44,550 - 18,650) * 15/100}

= 1,865 + {25,900 * 15/100}

= 1,865 + 3,885

= 5,750