Question

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 $67,200. Meg works part-time at the same university. She earns $32,200 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 final answers to the nearest whole dollar amount.)

a. What is the Comers’ tax liability for 2018 if they report the following capital gains and losses for the year?

Short-term capital gains	$	9,240
Short-term capital losses		(2,240	)
Long-term capital gains		15,470
Long-term capital losses		(6,470	)
Total tax liability:

Answer 1

Solution :-

a. What is the Comers’ tax liability for 2018 if they report the following capital gains and losses for the year?

Account details	Amount
Salary	= 64,000 + 21,000 = $85,000
Net-short-term capital gain	= 9,240 - 2,240 = $7,000
Net-long-term capital gain	= 15,470 - 6,470 = $9,000
AGI	= 85,000 + 7,000 + 9,000 = $101,000
Standard deduction	$24,000 (from new standard deduction law )
Personal exemption	$4,050 (from personal exemption tax table )
Taxable income	= 101,000 - 24,000 - 4,050 = $72,950
Preferentially taxed income	$9,000
Income txed at ordinary rates	= 72,950 - 9,000 = $63,950
Income subject to capital gains rates	= $9,000 * 0% = $0
Total taxed liability (from tax table )	= 1,855 + 15 % (63,950 - 18,550 ) = 1,855 + 15% ( 45,400 ) = 1,855 + 6,810 = $8,665