In 2024, Tom and Alejandro Jackson (married filing jointly) have $210,000 of ordinary taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.) On May 12, 2024, they sold a painting (art) for $110,000 that was inherited from Grandma on July 23, 2022. The fair market value on the date of Grandma's death was $90,000, and Grandma's adjusted basis of the painting was $25,000. They applied a long-term capital loss carryover from 2023 of $10,000. They recognized a $12,000 loss on the 11/1/2024 sale of bonds (acquired on 5/12/2014). They recognized a $4,000 gain on the 12/12/2024 sale of IBM stock (NYSE: IBM) (acquired on 2/5/2024). They recognized a $17,000 gain on the 10/17/2024 sale of rental property (the only §1231 transaction), of which $8,000 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,000 is subject to the 0, 15, or 20 percent maximum rates (the property was acquired on 8/2/2018). They recognized a $12,000 loss on the 12/20/2024 sale of bonds (acquired on 1/18/2024). They recognized a $7,000 gain on the 6/27/2024 sale of BH stock (acquired on 7/30/2015). They recognized an $11,000 loss on the 6/13/2024 sale of QuikCo stock (acquired on 3/20/2017). They received $500 of qualified dividends on 7/15/2024. Complete the required capital gains netting procedures and calculate the Jacksons' 2024 tax liability.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter16: Property Transactions: Capital Gains And Losses

Section: Chapter Questions

Problem 46P

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In 2024, Tom and Alejandro Jackson (married filing jointly) have $210,000 of ordinary taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.)

On May 12, 2024, they sold a painting (art) for $110,000 that was inherited from Grandma on July 23, 2022. The fair market value on the date of Grandma's death was $90,000, and Grandma's adjusted basis of the painting was $25,000.
They applied a long-term capital loss carryover from 2023 of $10,000.
They recognized a $12,000 loss on the 11/1/2024 sale of bonds (acquired on 5/12/2014).
They recognized a $4,000 gain on the 12/12/2024 sale of IBM stock (NYSE: IBM) (acquired on 2/5/2024).
They recognized a $17,000 gain on the 10/17/2024 sale of rental property (the only §1231 transaction), of which $8,000 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,000 is subject to the 0, 15, or 20 percent maximum rates (the property was acquired on 8/2/2018).
They recognized a $12,000 loss on the 12/20/2024 sale of bonds (acquired on 1/18/2024).
They recognized a $7,000 gain on the 6/27/2024 sale of BH stock (acquired on 7/30/2015).
They recognized an $11,000 loss on the 6/13/2024 sale of QuikCo stock (acquired on 3/20/2017).
They received $500 of qualified dividends on 7/15/2024.

Complete the required capital gains netting procedures and calculate the Jacksons' 2024 tax liability.

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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