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