During the current year, Ron and Anne sold the following assets: (Use the tax ra

Question

During the current year, Ron and Anne sold the following assets: (Use the tax rate schedules.)

*$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property).

Ignore the Net Investment Income Tax.

(a) Given that Ron and Anne have taxable income of only $20,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2017 assuming they file a joint return? (Round all your intermediate computations to the nearest whole dollar amount.)

Capital Asset Market Value Tax Basis Holding Period L stock $ 50,000 $ 41,000 > 1 year M stock 28,000 39,000 > 1 year N stock 30,000 22,000 < 1 year O stock 26,000 33,000 < 1 year Antiques 7,000 4,000 > 1 year Rental home 300,000* 90,000 > 1 year

Explanation / Answer

Capital Asset Market Value Tax Basis Holding Period Profit / - Loss L stock 50,000 41,000 > 1 year 9,000 Long term Captial Gain M stock 28,000 39,000 > 1 year -11,000 Long term capital loss N stock 30,000 22,000 < 1 year 8,000 Short term capital gain O stock 26,000 33,000 < 1 year -7,000 Short term capital loss Antiques 7,000 4,000 > 1 year 3,000 Rental home 300,000* 90,000 > 1 year Amount($) All ordinary tax income     20,000.00 Short term capital gain ( Net)       1,000.00 : = 8000-7000 Long term capital Loss ( Net)      -2,000.00 : = 9000-11000 Capital gain       3,000.00 Rental income 1,20,000.00 Gross tax income 1,44,000.00

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