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Capital Gain Rules and Tax Calculations

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.

$2.19