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Problem 6-A

Problem 6-A - 1 Arnold is in the 25 tax bracket for his...

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1. Arnold is in the 25% tax bracket for his regular income. He has the following during the year: LTCG (long term capital gain): $20,000 LTCL (long term capital loss): $12,000 STCG (short term capital gain): $24,000 STCL (short term capital loss): $9,000 How much tax will he owe on his capital gain/loss transactions? (ANS: The "longs" net out to an $8,000 gain; the "shorts" net out to a $15,000 gain. So $8,000 x 15% favorable tax rate: $1,200 in tax owed, and $15,000 x 25% (his regular tax rate) = $3,750 tax owed.) 2. Alex is in the 25% tax bracket for his regular income. He has the following during the year: LTCG (long term capital gain): $20,000 LTCL (long term capital loss): $12,000 STCG (short term capital gain): $2,000 STCL (short term capital loss): $9,000 How much tax will he owe on his capital gain/loss transactions? (ANS: The "longs" net out to an $8,000 gain; the "shorts" net out to a $7,000 loss. So you net the gain against the loss and a $1,000 net long term gain results. $1,000 x 15% favorable tax rate = $150 in tax owed.) 3. Andy is in the 25% bracket for his regular income. He has the following during the year: LTCG (long term capital gain): $13,000 LTCL (long term capital loss): $12,000 STCG (short term capital gain): $4,000 STCL (short term capital loss): $9,000 (ANS: The "longs" net out to a $1,000 gain; the "shorts" net out to a $5,000 loss. So you net the gain
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Problem 6-A - 1 Arnold is in the 25 tax bracket for his...

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