Question

Henrich is a single taxpayer. In 2018, his taxable income is $453,500. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, Estates and Trusts for reference. (Do not round intermediate calculations. Round your answer to 2 decimal places. Leave no answer blank. Enter zero if applicable.)

c. His $453,500 of taxable income includes $46,000 of long-term capital gain that is taxed at preferential rates.

Income tax
Net investment income tax	1,748.00
Total tax liability	$1,748.00

THE ANSWER IS NOT $125,214.50, $123,823.00, OR $ 100,904.00

Answer 1

Description	amount	explanation
1) taxable income	453500
2)preferentially taxed income	46000
3)income taxed at ordinary rates	407500	1-2
4)tax on income taxed at ordinary rates	$118314.5	45689.5 + (407500-200000) × 35%
5)tax on preferentially taxes income	8285	(18300(425800-407500) × 15%) + (27700(46000-18300) × 20%)
6) income tax	$126599.5	4 + 5
7)net investment income tax	1748	3.8 % x 46000 = 1748
Total tax liabiltiy	128347.5

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