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James has other taxable income totaling $75,000. He previously purchased 500 shares of stock at $10...

James has other taxable income totaling $75,000. He previously purchased 500 shares of stock at $10 per share.

a.       Calculate James’s capital gain/loss if he sells the stock at $12 per share.

b.      Calculate James’s total tax

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Bonds price today Bonds price when purchased originally Change in stock price # of shares originally purchased and held Jamess capital gain if he sells the stock at $12 $12 $10 $2 S12-510] 500 1,000 [500 shares x $2] James other taxable income is $75,000Assuming that James is a single: If it is assumed that the shares are held for less than one vear: 2018 Tax Rate 10% 12% 22% 24% 32% 35% 37% Single $0 to $9,525 $9,525 to $38,700 $38,700 to $82,500 $82,500 to $157,500 $157,500 to $200,000 $200,000 to $500,000 Over $500,000 Capital gain of $1,000 shall be considered as James ordinary income and taxed at 22% as his total taxable ordinary income will be $75,000+ $1,000-$76,000 which falls in 22% tax bracket of $38,700 to $82,500. His total tax liability for 2018 would be: For $0 to $9,525 For $9,525 to $38,700 For $38,700 to $76,000 Total tax payable-2018 $952.50 [$9,525 x 10%] $3,501.00 [($38,700-$3.525) x 12%) $8,206.00 [($76,000-$38,700) x 2296] $12,659.50 If it is assumed that the shares are held for more than one vear: Capital gain of $1,000 shall be taxed at special rate of 15% and his other ordinary income shall be taxed as per the tax bracket. So Long-term capital gains tax rate Your income For $0 to $9,525 For $9,525 to $38,700 For $38,700 to $75,000 Tax on ordinary income (+ Tax on capital gain Total tax payable-2018 $952.50 [$9,525 x 10%] $3,501.00 [($38,700 $9,525) x 12%] $7,986.00 [($75,000 _ $38,700) x 2296] 0% $0 to $38,600 15% $38,601 to $425,800 $12,439.50 $150.00 [$1,000 x 15%) $12,589.50 20% $425,801 or more

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