In 2021, Tom and Amanda Jackson (married filing jointly) have $252,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) On May 12, 2021, they sold a painting (art) for $116,500 that was inherited from Grandma on July 23, 2019. The fair market value on the date of Grandma’s death was $93,250 and Grandma’s adjusted basis of the painting was $26,300. They applied a long-term capital loss carryover from 2020 of $10,650. They recognized a $12,325 loss on the 11/1/2021 sale of bonds (acquired on 5/12/2011). They recognized a $4,390 gain on the 12/12/2021 sale of IBM stock (acquired on 2/5/2021). They recognized a $18,560 gain on the 10/17/2021 sale of rental property (the only §1231 transaction), of which $9,040 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,520 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2015). They recognized a $12,650 loss on the 12/20/2021 sale of bonds (acquired on 1/18/2021). They recognized a $7,325 gain on the 6/27/2021 sale of BH stock (acquired on 7/30/2012). They recognized an $11,650 loss on the 6/13/2021 sale of QuikCo stock (acquired on 3/20/2014). They received $760 of qualified dividends on 7/15/2021. After completing the required capital gains netting procedures, what will be the Jacksons’ 2021 tax liability?

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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In 2021, Tom and Amanda Jackson (married filing jointly) have $252,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.)

On May 12, 2021, they sold a painting (art) for $116,500 that was inherited from Grandma on July 23, 2019. The fair market value on the date of Grandma’s death was $93,250 and Grandma’s adjusted basis of the painting was $26,300.
They applied a long-term capital loss carryover from 2020 of $10,650.
They recognized a $12,325 loss on the 11/1/2021 sale of bonds (acquired on 5/12/2011).
They recognized a $4,390 gain on the 12/12/2021 sale of IBM stock (acquired on 2/5/2021).
They recognized a $18,560 gain on the 10/17/2021 sale of rental property (the only §1231 transaction), of which $9,040 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,520 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2015).
They recognized a $12,650 loss on the 12/20/2021 sale of bonds (acquired on 1/18/2021).
They recognized a $7,325 gain on the 6/27/2021 sale of BH stock (acquired on 7/30/2012).
They recognized an $11,650 loss on the 6/13/2021 sale of QuikCo stock (acquired on 3/20/2014).
They received $760 of qualified dividends on 7/15/2021.

After completing the required capital gains netting procedures, what will be the Jacksons’ 2021 tax liability?

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