### 2021 Tax Rate Schedules#### Individuals**Schedule X - Single**| If taxable income is over: | But not over: | The tax is: ||----------------------------|------------------|-----------------------------------------------------|| $0 | $9,950 | 10% of taxable income || $9,950 | $40,525 | $995 plus 12% of the excess over $9,950 || $40,525 | $86,375 | $4,664 plus 22% of the excess over $40,525 || $86,375 | $164,925 | $14,751 plus 24% of the excess over $86,375 || $164,925 | $209,425 | $33,603 plus 32% of the excess over $164,925 || $209,425 | $523,600 | $47,843 plus 35% of the excess over $209,425 || $523,600 | — | $157,804.25 plus 37% of the excess over $523,600 |#### Schedule Y-1 - Married Filing Jointly or Qualifying Widow(er)| If taxable income is over: | But not over: | The tax is: ||----------------------------|------------------|-----------------------------------------------------|| $0 | $19,900 | 10% of taxable income || $19,900 | $81,050 | $1,990 plus 12% of the excess over $19,900 || $81,050 | $172,750 | $9,328 plus 22% of the excess over $81,050 || $172,750 | $329,850 | $29,502 plus 24% of the excess over $172,750 || $329,850 | $418,850 | $67,206 plus 32% of the excess over $329,850 || $418,850 | $628,300 | $95,686 plus 35% of the excess over $418,850 || $628,300 | — | $168,993.50 plus 37% of the excess over $628,300 | ### Calculating Taxable Income and Tax Liability**Scenario:**Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2021, she sells the following long-term assets used in her business:| Asset | Sales Price | Cost | Accumulated Depreciation ||------------|-------------|----------|-------------------------|| Building | $230,000 | $200,000 | $52,000 || Equipment | $80,000 | $148,000 | $23,000 |Lily's taxable income before these transactions is $190,500. What are Lily's taxable income and tax liability for the year? Use the [Tax Rate Schedule](#) for reference. _(Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)_**Step 1: Determine Gain or Loss on the Sale of Assets**Calculate the adjusted basis and gain for each asset:- **Building:** - Adjusted Basis = Cost - Accumulated Depreciation - Adjusted Basis = $200,000 - $52,000 = $148,000 - Gain on Sale = Sales Price - Adjusted Basis - Gain on Sale = $230,000 - $148,000 = $82,000- **Equipment:** - Adjusted Basis = Cost - Accumulated Depreciation - Adjusted Basis = $148,000 - $23,000 = $125,000 - Loss on Sale = Sales Price - Adjusted Basis - Loss on Sale = $80,000 - $125,000 = ($45,000)**Step 2: Adjust Lily's Taxable Income**- Initial Taxable Income = $190,500- Gain on Sale of Building = $82,000- Loss on Sale of Equipment = ($45,000)- Adjusted Taxable Income = $190,500 + $82,000 - $45,000- Adjusted Taxable Income = $227,500**Step 3: Calculate Tax Liability**Refer to the [Tax Rate Schedule](#) to calculate Lily's tax liability based on her adjusted taxable income.**Taxable Income and Tax Liability Calculation**| Description | Amount ||-------------------|----------|| Taxable Income | $227,500 || Tax Liability

Lets understand the basics. For calculating taxable income, we need to use below formula. Taxable…

Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2021, she sells the following long-term assets used in her business: Sales Price Asset Building Equipment Cost $ 200,000 Accumulated Depreciation $ 52,000 23,000 $ 230,000 80,000 148,000 Lily's taxable income before these transactions is $190,500. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Description Amount Taxable income Tax liability

Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2021, she sells the following long-term assets used in her business: Sales Price Asset Building Equipment Cost $ 200,000 Accumulated Depreciation $ 52,000 23,000 $ 230,000 80,000 148,000 Lily's taxable income before these transactions is $190,500. What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Description Amount Taxable income 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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Subject : - Account