Answered: Matt and Meg Come

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

Matt and Meg Comer are married and file a joint tax return. They do not have any children. Matt works as a history professor at a local university and earns a salary of $68,900. Meg works part time at the same university. She earns $44,100 a year. The couple does not itemize deductions. Other than salary, the Comers' only other source of income is from the disposition of various capital assets (mostly stocks). (Use the tax rate schedules,Dividends and Capital Gains Tax Rates.)

a. What is the Comers' tax liability for 2023 if they report the following capital gains and losses for the year?

Short-term capital gains	$ 9,550
Short-term capital losses	(2,550)
Long-term capital gains	15,200
Long-term capital losses	(7,100)

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.

Expert Solution

Step 1: Working notes

Income tax is compulsory for all taxpayers. However, incomes from different sources are taxed at different rates, it’s better to get familiar with all possible provisions to compute the right amount of tax.

The 2023 standard deduction is $13,850 for single filers, $27,700 for joint filers or $20,800 for heads of household. People 65 or older may be eligible for a higher standard deduction amount.28-Sept-2023