Question

You just sold stock for $10,000 which you bought two years ago for $5,000. You are also in the 25% income tax bracket. How much tax will you have to pay on the transaction?

Answer 1

$1,250

Step-by-step explanation:

The tax in reference is capital gain tax.

The gain from this transaction is the selling price - the purchase price.

= $10,000 -$5000

=$5000

The gain is $5000

The tax on this gain will be 25% of $5000

=25/100 x $5000

=0.25 x $5000

=$1,250