Question

Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information: . She received $76,000 in salary. • She received $10,500 of dividend income. • She received $5,900 of interest income on Home Depot bonds. • She received $21,500 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $5,300. . She received $12,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $6,600 • Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet 3. What is Mary's federal tax liability? Round your answer to the nearest cent. Do not round intermediate calculations b. What is her marginal tax rate? Round your answer to 1 decimal place. 11. What is her average tax rate? Round your answer to 2 decimal places

Answer 1

Calculation of federal Tax liability

PArticulars	Amount ($)
Gross salary	76000
Add interest	5900
short term Capital Gain	5900	Google stock (12500-6600) its hold by mary for less than 1year that why its short tem capital gain
Adjustable Gross income	87800	(76000+5900+5900)
Less personal exemption	-4000
Less itemized deduction	-7500
Taxable income before Lt gain And Dividends	76300	(87800-4000-7500)
Taxes on Taxable income before LT Gain and dividends :
Tax liability on base bracket	5156.25	upto $37450
Tax liability on excess over base@22%	9712.5	(76300-37450)*25%
Tax on Taxable income before LT Gain and dividends	14868.75	(5156.25+9712.5)
Taxes on LT Gain and dividends :
LT gain	16200	sale -cost =(21500-5300)=16200
dividend	10500
	26700
Tax on LT Gain and dividends :@15%	4005	26700*15%
total federal tax liability	$ 18873.75	14868.75+4005

a) FEDERAL TAX LIABILITY = $ 18873.75

B) MARGINAL TAX RATE = 25%

C) AVERAGE TAX RATE = TOTAL TAX / TOTAL INCOME

=18873.75 / ( 26700+76300)*100

=18873.75 /103000 *100

=18.324%