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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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