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Jeb recognized a $48,000 25% net capital gain and a $95,000 0/15/20 % capital gain. Assume that his taxable income is $10,000. Jeb is single. What is Jeb's gross tax liability for the year?

User Odrakir
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Final answer:

Jeb's gross tax liability for the year is $27,793.75.

Step-by-step explanation:

In order to calculate Jeb's gross tax liability for the year, we need to consider the different tax rates for each capital gain. First, we calculate the tax on the $48,000 net capital gain at a 25% rate. This would result in a tax of $12,000.

Next, we calculate the tax on the $95,000 capital gain that is subject to different rates. The first $9,075 is taxed at 0%, resulting in no tax owed. The next $27,825 ($36,900 - $9,075) is taxed at 15%, resulting in a tax of $4,173.75. The remaining $58,100 ($95,000 - $36,900) is taxed at 20%, resulting in a tax of $11,620. Therefore, the total tax owed on this capital gain is $15,793.75.

Finally, we consider Jeb's taxable income of $10,000. Since this income is below the taxable income thresholds, there is no tax owed on this amount.

To calculate Jeb's gross tax liability, we add up the taxes owed on each component: $12,000 + $15,793.75 = $27,793.75.

User Wake Up Brazil
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