Question

Darren is in the 15% tax bracket and had the following capital asset transactions during 2015:

Long-term gain from the sale of a coin collection - $11,000
Long-term gain from the sale of a land investment - $10,000
Short-term gain from the sale of a stock investment - $2,000

Darren's tax consequences from these gains are as follows:

a. (15% × $23,000)
b. (15% × $13,000) + (28% × $11,000)
c. (0% × $10,000) + (15% × $13,000)
d. (5% × $10,000) + (15% × $13,000)
e. None of these choices are correct.

Answer 1

Darren's tax consequences for the capital asset transactions do not match any of the given choices.

Step-by-step explanation:

The tax consequences for Darren's gains are as follows:

a. (15% × $23,000)

b. (15% × $13,000) + (28% × $11,000)

c. (0% × $10,000) + (15% × $13,000)

d. (5% × $10,000) + (15% × $13,000)

e. None of these choices are correct

Darren's tax consequences can be calculated as follows:

a. (15% × $23,000) = $3,450

b. (15% × $13,000) + (28% × $11,000) = $1,950 + $3,080 = $5,030

c. (0% × $10,000) + (15% × $13,000) = $0 + $1,950 = $1,950

d. (5% × $10,000) + (15% × $13,000) = $500 + $1,950 = $2,450

Based on these calculations, the correct answer is (e) None of these choices are correct.