Answered: Henrich is a single taxpayer. In 2021,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Henrich is a single taxpayer. In 2021, his taxable income is $454,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. (Do not round intermediate calculations. Leave no answer blank. Enter zero if applicable. Round your final answers to 2 decimal places.)

b. His $454,000 of taxable income includes $2,000 of long-term capital gain that is taxed at preferential rates.

Amount
Income tax
Net investment income tax
Total tax liability
0.00
%24

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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