Question

Kimberly, a single taxpayer, sold three capital assets during September 2019. She sold a collectible painting held five years for a gain of $3,000; stock held three years for a loss of $1,000; and stock held seven years for a gain of $5,000. Kimberly’s ordinary income marginal tax rate is 32% and her Regular LT Capital Gain tax rate is 15%. Compute Kimberly’s additional tax due as a result of these capital transactions.

Answer 1

$1,050

Step-by-step explanation:

since these three transactions involved capital gains or losses (investments lasted more than 1 year), they will be taxed using the capital gains tax rate = 15%

total capital gains = $3,000 (painting) + $5,000 (stocks) - $1,000 (other stocks) = $7,000

total taxes due = $7,000 x 15% capital gains tax rate = $1,050