Question

During the current year, Ron and Anne sold the following assets: (Use the tax rate schedules.)

Capital Asset	Market Value		Tax Basis		Holding Period
L stock	$	50,000	$	41,000	> 1 year
M stock		28,000		39,000	> 1 year
N stock		30,000		22,000	< 1 year
O stock		26,000		33,000	< 1 year
Antiques		7,000		4,000	> 1 year
Rental home		300,000*		90,000	> 1 year

*$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property).

Ignore the Net Investment Income Tax.

(a) Given that Ron and Anne have taxable income of only $20,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2017 assuming they file a joint return? (Round all your intermediate computations to the nearest whole dollar amount.)

Answer 1

Capital Asset	Market Value	Tax Basis	Holding Period	Profit / - Loss
L stock	50,000	41,000	> 1 year	9,000	Long term Captial Gain
M stock	28,000	39,000	> 1 year	-11,000	Long term capital loss
N stock	30,000	22,000	< 1 year	8,000	Short term capital gain
O stock	26,000	33,000	< 1 year	-7,000	Short term capital loss
Antiques	7,000	4,000	> 1 year	3,000
Rental home	300,000*	90,000	> 1 year
			Amount($)
All ordinary tax income			20,000.00
Short term capital gain ( Net)			1,000.00
: = 8000-7000
Long term capital Loss ( Net)			-2,000.00
: = 9000-11000
Capital gain			3,000.00
Rental income			1,20,000.00
Gross tax income			1,44,000.00