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Federal Income Tax for Investors

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What is the federal income tax owed by an investor in the 35 percent income tax bracket (15 percent tax rate on long-term capital gains and dividend income)?

a. Megan sold stock A for a short-term capital gain of \$5,500; sold stock B for a short-term capital loss of \$2,100

b. Margaret sold stock A for a short-term capital loss of \$2,000; sold stock B for a short-term capital gain of \$4,000

c. Melissa is 70 years old and withdraws \$1,000 from her Roth IRA account Would the answer be different is she were 65 years old?

d. Morgan bought 100 shares of IBM in March for \$100 a share and sold the shares in April for \$110.

e. Murphy contributed \$4,000 to an IRA and used the proceeds to purchase sotck A for \$4000. Teh stock was subsequently sold for \$4,500 after year had passed. hide problem

Solution Preview

a.
STCG=5500; STCL=2100
First net the STCG and STCL to reach NSTCG of 3400.
NSTCG is taxed at investor's regular income tax bracket of 35%, so federal income tax=3400*35%=1190
b.
STCL=2000; ...

Solution Summary

The expert examines federal income tax for investors.

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