There are many tax rules and regulations you should be aware of when investing-whether it be in stocks; bonds; mutual funds;real estate; or collectibles such as artwork, antiques, gems, memorabilia, stamps, and coins. Capital gains are proceeds derivedfrom these types of investments. Unless they are specified as being tax-free, such as municipal bonds, you must pay capital gainstaxes on these proceeds.Capital gains are taxed in one of two ways. If the investment is held for one year or less, this is considered short-term and istaxed as ordinary income at your regular income tax rate. As this is written, if the investment is held for more than one year, it isconsidered long-term and qualifies for various tax discounts, as follows for single taxpayers with earnings as shown below.Capital Gains RatesStocks HeldUp to $38,700$38,700-$426,700Over $426,700Over 1 year0%15%20%(long-term)(a) If you are in the 23% tax bracket for ordinary income and have a 15% capital gains rate, how much tax will you save (in $)by waiting for an investment to become long-term before selling it if your taxable profit from this investment is $35,000?2$(b) How much will you save (in $) if you are in the 35% tax bracket for ordinary income and have a 20% capital gains rate?$

Capital gains are the appreciation in the stock price. Example, You buy at $100 each share and after…

(a) If you are in the 23% tax bracket for ordinary income and have a 15% capital gains rate, how much tax will you save (in $) by waiting for an investment to become long-term before selling it if your taxable profit from this investment is $35,000? 24 (b) How much will you save (in $) if you are in the 35% tax bracket for ordinary income and have a 20% capital gains rate?

(a) If you are in the 23% tax bracket for ordinary income and have a 15% capital gains rate, how much tax will you save (in $) by waiting for an investment to become long-term before selling it if your taxable profit from this investment is $35,000? 24 (b) How much will you save (in $) if you are in the 35% tax bracket for ordinary income and have a 20% capital gains rate?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter28: Income Taxation Of Trusts And Estates

Section: Chapter Questions

Problem 11DQ

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There are many tax rules and regulations you should be aware of when investing-whether it be in stocks; bonds; mutual funds; real estate; or collectibles such as artwork, antiques, gems, memorabilia, stamps, and coins. Capital gains are proceeds derived from these types of investments. Unless they are specified as being tax-free, such as municipal bonds, you must pay capital gains taxes on these proceeds. Capital gains are taxed in one of two ways. If the investment is held for one year or less, this is considered short-term and is taxed as ordinary income at your regular income tax rate. As this is written, if the investment is held for more than one year, it is considered long-term and qualifies for various tax discounts, as follows for single taxpayers with earnings as shown below. Stocks Held Capital Gains Rates Up to $38,700 $38,700–$426,700 Over $426,700 Over 1 year(long-term) 0% 15% 20% (a) If you are in the 24% tax bracket for ordinary income and have a 15% capital…
There are many tax rules and regulations you should be aware of when investing-whether it be in stocks; bonds; mutual funds; real estate; or collectibles such as artwork, antiques, gems, memorabilia, stamps, and coins. Capital gains are proceeds derived from these types of investments. Unless they are specified as being tax-free, such as municipal bonds, you must pay capital gains taxes on these proceeds. Capital gains are taxed in one of two ways. If the investment is held for one year or less, this is considered short-term and is taxed as ordinary income at your regular income tax rate. As this is written, if the investment is held for more than one year, it is considered long-term and qualifies for various tax discounts, as follows for single taxpayers with earnings as shown below. Stocks Held Capital Gains Rates Up to $38,700 $38,700–$426,700 Over $426,700 Over 1 year(long-term) 0% 15% 20% (a) If you are in the 26% tax bracket for ordinary income and have a 15%…
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