Check my work 4 Required information The following information applies to the He
ID: 2530850 • Letter: C
Question
Check my work 4 Required information The following information applies to the Henrich is a single taxpayer. In 2017, his taxable income is $425,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your answer to 2 decimal places. Leave no answer blank. Enter zero if applicable.) Part 1 of 4 questions displayed below. Skipped eBook a. All of his income is salary from his employer. Print Income tax Net investment income tax Total tax liability 0.00Explanation / Answer
a) Taxable income (a) $425,000.00 Preferentially taxed income (b) 0 Income taxed at ordinary rates (a - b) $425,000.00 Tax on income taxed at ordinary rates [($425,000 x 35%)-$ 24,934.75) $123,815.25 Tax on preferentially taxed income 0 Income tax $123,815.25 Net investment income tax 0 Total Tax Liability $123,815.25 b) Taxable income (a) $425,000.00 Preferentially taxed income (b) 2000 Income taxed at ordinary rates (a - b) $423,000.00 Tax on income taxed at ordinary rates [($423,000 x 35%)-$ 24,934.75) $123,115.25 Tax on preferentially taxed income (2000 x 15%) 300 Income tax $123,415.25 Net investment income tax (Since Henrich’s modified AGI exceeds $200,000, the entire $2,000 long-term capital gain is subject to the 3.8% net investment income tax ($2,000 x 3.8% ) 76 Total Tax Liability $123,491.25 c) Taxable income (a) $425,000.00 Preferentially taxed income (b) 55000 Income taxed at ordinary rates (a - b) $370,000.00 Tax on income taxed at ordinary rates [($370,000 x 33%)-$ 16,600.75) $105,499.25 Tax on preferentially taxed income (55000 x 15%) 8250 Income tax $113,749.25 Net investment income tax (Since Henrich’s modified AGI exceeds $200,000, the entire $55,000 long-term capital gain is subject to the 3.8% net investment income tax ($55,000 x 3.8% ) 2090 Total Tax Liability $115,839.25 d) Taxable income (a) $195,000.00 Preferentially taxed income (b) 50000 Income taxed at ordinary rates (a - b) $145,000.00 Tax on income taxed at ordinary rates [($145,000 x 28%)-$ 7018.25) $33,581.75 Tax on preferentially taxed income (50000 x 15%) 7500 Income tax $41,081.75 Net investment income tax (3.8% x the lesser of (a) $50,000 of net investment income or (b) ($210,000 modified AGI less $200,000 threshold) = 3.8% x $10,000 = 380 Total Tax Liability $41,461.75