Question

In 2019, Tom and Amanda Jackson (married filing jointly) have $200,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.)

1. On May 12, 2019, they sold a painting (art) for $110,000 that was inherited from Grandma on July 23, 2017. The fair market value on the date of Grandma’s death was $90,000 and Grandma’s adjusted basis of the painting was $25,000.
2. They applied a long-term capital loss carryover from 2018 of $10,000.
3. They recognized a $12,000 loss on the 11/1/2019 sale of bonds (acquired on 5/12/2009).
4. They recognized a $4,000 gain on the 12/12/2019 sale of IBM stock (acquired on 2/5/2019).
5. They recognized a $17,000 gain on the 10/17/2019 sale of rental property (the only §1231 transaction) of which $8,000 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,000 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2013).
6. They recognized a $12,000 loss on the 12/20/2019 sale of bonds (acquired on 1/18/2019).
7. They recognized a $7,000 gain on the 6/27/2019 sale of BH stock (acquired on 7/30/2010).
8. They recognized an $11,000 loss on the 6/13/2019 sale of QuikCo stock (acquired on 3/20/2012).
9. They received $500 of qualified dividends on 7/15/2019.
   
   After completing the required capital gains netting procedures, what will be the Jacksons’ 2019 tax liability? (Do not round intermediate calculations.)

Answer 1

Answer :

Computaton of Jackson's tax liability	Schedule for capital gain income
Particulas	Amount ($)		Particulars		Amount ($)
Income from business	200000		LTCG on sale of paiint		115000
Capital gain income	118000		LTCL		10000
Qualified dividned	500		LTCL (On sale of bonds)		12000
Total inocme	$318500		STCG		4000
			LTCG
Tax on capital gains & dividned	$17775		8000	25%
(Filling jointly & Married)			9000	20%
Rate of tax-15%			STCL		12000
			LTCG		7000
Tax on income	$45316.5		LTCL		11000
(Tax rate as per given in question)
			Net off LTCG		$101000
			Specific		$17000
Total tax liability	$63091.5