Question

Alyssa is a head of household, has $27,000 of taxable income in 2018 from non-capital gain or loss sources, and has the following capital gains and losses. (10 points)

28% long-term capital gain $ 4,300

28% long-term capital loss (2,000)

0%/15%/20% long-term capital gain 19,000

Short-term capital loss (1,700)

A)What is Alyssa’s taxable income? Show and label all calculations.

B)How will this taxable income be taxed? Indicate what portion of the taxable income will be taxed at ordinary rates versus preferential rates. Be specific as to which preferential rates apply.

Answer 1

28% long-term capital gain	4300
28% long-term capital loss	(2000)
Net 28% long-term capital gain	2300
Net short-term capital loss	(1700)
Remaining 28% long-term gain	600
0%/15%/20% long-term capital gain	19000
Net long-term capital gain	19600
Other taxable income	27000
Taxable income	46600

Part B

Tax on $27,000 regular taxable income	900	27000-18000standard deduction = 9000*10%
Tax on 28% gain portion of net long-term capital gain	90	(600*15%)
Tax on 0%/15%/20% net long-term capital gain	0	(19000*0%)
Total tax liability	$990