Question

Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of 63 stock mutual fund shares ​($19 per​ share) and​ long-term capital gain distributions of 46 stock mutual fund shares​ (also ​$19 per​ share). What are the tax consequences of​ Ronnie's stock mutual fund ownership if he is in a 24​% marginal tax​ bracket?

Answer 1

The tax consequences of​ Ronnie's stock mutual fund ownership if he is in a 24​% marginal tax​ bracket is that the tax liability for more than one year holding would be $310.65

Step-by-step explanation:

According to given data we have the following:

long-term capital gain=46*19=$874

Dividend=63*19=$1,197

Tax bracket=24%

The tax rate for the long-term capital gain is 15% for taxpayer having 24% and above tax bracket

Therefore, to calculate the tax liability for more than one year holding we would have to make the following calculation:

tax liability for more than one year holding=(long-term capital gain+dividend)*15%

tax liability for more than one year holding=($874+$1,197)*15%

tax liability for more than one year holding=$310.65