Ch 16 Extra Problems

# Ch 16 Extra Problems - is taxed at 0 and some is taxed at...

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Ch 16 Extra Problem Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Joe is filing as head of household and has 2010 taxable income of \$50,000 which includes \$42,000 of 0%/15% net long-term capital gain. What is his tax on taxable income using the alternative tax method? ____ 2. Sara is filing as head of household and has 2010 taxable income of \$27,000 which includes \$13,000 of net long-tem capital gain. The net long-term capital gain is made up of \$10,000 25% gain and \$3,000 0%/15% gain. What is the tax on her taxable income using the alternative tax method? a. \$0. b. \$2,345. c. \$3,003. d. \$4,003. e. None of the above.

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Ch 16 Extra Problem Answer Section MULTIPLE CHOICE 1. ANS: B Since Joe’s taxable income takes him out of the 15% bracket, some of the \$42,000 net long-term capital gain
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Unformatted text preview: is taxed at 0% and some is taxed at 15%. The total tax is \$1,468 (\$800 tax on \$8,000 regular taxable income + \$0 tax on \$37,550 of long-term capital gain (0%) + \$668 tax on the remaining \$4,450 of long-term capital gain(15%)). 2. ANS: C Sara’s taxable income does not take her out of the 15% regular tax bracket. Therefore, her \$3,000 0%/15% long-term capital gain is taxed at 0%, but her 25% gain is taxed at the regular tax rate since that is lower than 25%. Her tax on taxable income is \$3,003 (the tax on \$14,000 regular taxable income plus \$10,000 25% net long-term capital gain at regular tax rates)....
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Ch 16 Extra Problems - is taxed at 0 and some is taxed at...

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