Question

Samuel Jenkins made two investments; the first was 13 months ago and the second was two months ago. He just sold both investments and has a capital gain of $11,000 on each. If Samuel is single and has taxable income of $40,000, what will be the amount of capital gains tax on each investment?

Answer 1

short: 11,000 --> 1,320 income tax

long: 11,000 --> zero tax income

Step-by-step explanation:

The capital gains are clasiffied as long.term gain once they were held for period of time of more than a year during the current holder.

Thus, the 13 month ago investment will be considered long term

while the other short term

the rate for short term is 12% at Samuel income bracket

while the long.term capital gain will not be taxed,

short term:

11,000 x 12% = 1.320‬