Question

Trisha, who is single and has taxable income of $300,000, sells the following capital assets in 2019 with gains and losses as shown. With accurate calculations please.

Asset Gain or (Loss) Holding Period A $15,000 15 months B 7,000 20 months C (3,000) 14 months

a. Determine Trisha’s increase in income tax liability as a result of the three sales. All assets are stock held for investment. Ignore the effect of increasing AGI on deductions and phaseout amounts.

b. Determine her increase in income tax liability if the holding period for asset B is 8 months.

c. Determine her increase in income tax liability if the holding periods are the same as in the Part a but asset B is an antique clock.

d. Determine her increase in income tax liability if her taxable income is $700,000.

Answer 1

Trisha, who is single and has taxable income of $300,000, sells the following capital assets in 2019 with gains and losses as shown. With accurate calculations please.

Question :- Trisha , who is single and has taxable income of $ 300.000. Sells the following capital assets in 2019 with gains and losses as shown Answer: (6) Determine Trisha's increase in income taxe liability as a result of the thome sales. In this case, holding Perriod of all the thoree assets is more than 12 months. Hence, long team Capital gain (LTCG) tax will apply in this case. Long term capital gains tax is a tax on profits forom the sale of an asset held for more than a year. Since, Trisha is single and her taxable income including capital gain is not more than $434550, her income will be taxed @ 15%. So, based on these facts. following is the calculation of hear incease in income tax liability.

Total Gain = $ 15000+ 7000 - 3000 = $19000. Taxable amount = $ 19000* 0.15 - $ 2850. (b. Determine hoor incorease in income fare liability if the holding periods are the same as in the Part a but asset B is an antique clock. In this case, holding period of asset B is changed to 8 months and hence it will be taxed as short term capital gain. Shart term capital gain is taxed at ordinary income tax rate. Since, torishas total income is $ 300000 she will be taxed @ 35% SⓇ, based on these facts Following is the calculation of her increase in income tax liablity. Long term capital gain = $ 15000 - 3000 = $12000 Tax on LTCG = $ 12000 *0.15 - $ 1800 short term capital gain = $ 7000 Tax on STC GY - $ 7000*0.35 = 24506 Total tax on Capital gains= $ 1800+2456 $4256

(C) Determine her increase in income tax liability if the holding Periods are the same as in the part a but asset B is an antique clock. In this case, holding Period of all assets are more than 12 months, hence all are long team capital gains. Asset B is identified as an antique. Antiques are taxed at 28% in case Of LTCG. SO considering these facts following are calculation of increase in tax licbility. Long team capital gain on Asset A and C= $15000 - 2000 = $12000 Tax on LTC G2 = $12000*0.15 - $ 1800 LTCG on Asset B = $ 7000*0.28 = $ 1960 Total Tax = $3760 (d) Detcomine her increase in income tax liability if her taxable income is $.700.000. In this case forisha's taxable income is $ 700000 and hence LTCG will be taxed at 20%

Total Gain = $15.000 + 7000 - 3000 = $19000. Taxable amount = $19000 * 0.20 = $ 2800.