Explore BrainMass

Explore BrainMass

    Netting Gains and Losses

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    5-44 Netting Gains and Losses. Trisha, whose tax rate is 35%, sells the following capital assets in 2007 with gains and
    losses as shown:

    Asset Gain or (loss) Holding Period

    A $15,000 15 months

    B 7,000 20 months

    C (3,000) 14 months

    a. Determine Trisha's increase in tax liability as a result of the three sales. All assets are stock held for investment. Ignore
    the effect of increasing AGI on deductions and phase-out amounts.

    b. Determine her increase in tax liability if the holding period for asset B is 8 months.

    c. Determine her increase in tax liability if the holding periods are the same as in Part a but asset B is an antique clock.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:02 pm ad1c9bdddf
    https://brainmass.com/business/accounting/211920

    Solution Preview

    a. Determine Trisha's increase in tax liability as a result of the three sales. All assets are stock held for investment. Ignore
    the effect of increasing AGI on deductions and phase-out amounts.

    Net Capital gain: $19,000

    Maximum tax rate ...

    Solution Summary

    This posting calculates the increase in tax liability for an individual whose tax rate is 35% and who sells capital assets with different holding periods for gains/losses.

    $2.19

    ADVERTISEMENT