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# Capital Gain Rules and Tax Calculations

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You are in the 28% income tax bracket and pay long-term capital gains taxes of 15%. What are the taxes owed or save in the current year for each of the following sets of transactions

a) You buy 100 shares of ZYX for \$10 and after seven months sell it on 12/31,200x, for \$23. You buy 100 shares of WER for \$10 and after 15 months sell it on 12/31, 200x, for \$7. You buy 100 shares of DFG, for \$10 and after 9 months, on 12/31/200x, it is selling for \$15.

b) You buy 100 shares of PYX for %60 and after 7 months sell it on 12/31,200y, for \$37. You buy 100 shares of WER for \$60 and after 15 months sell it on 12/31/200y, for \$67. You buy 100 shares of DFG for \$60 and after 9 months sell it on 12/31/200y. For \$76.

c) On 1/2/200x, you buy 100 shares of ZYX for \$40 and sell it for \$31 after 21 months. On 1/2/200x, you buy 100 shares of WER for \$40 and sell it for \$27 after 15 months. On 1/2/200x, you buy 100 shares of DFG for \$40 and sell it for \$16 after 18 months.

d) On 1/2/200x, you buy 100 shares of ZYX for \$60. ON 10/2/200x, you sell 100 shares of ZYX for \$40. On 10/10/200x, you purchase 100 shares of ZYX for \$25.

#### Solution Preview

ST: short term capital gain/loss
LT: long term capital gain/loss

Group A
ST: ZYX 2300 -1000 = 1300
LT: WER 700 - 1000 = (300)
ST: DFG 1500 - 1000 = 500
LT losses offset ST gains. The net amount of \$1500 gain is taxed at ordinary rates. Tax is ...

#### Solution Summary

For the four groups of capital gain transactions, the solution explains how to offset and combine the gains and losses for calculation of the tax amount due.

\$2.49