Samuel Jenkins made two investments; the first was 13 months ago and the second was two months ago. He just sold both investments and has a capital gain of $10,000 on each. If Samuel is single and has taxable income of $40,000, what will be the amount of capital gains tax on each investment? See Capital Gains table and Taxable income rate table. Investment 1: held 13 months: whats the capital gains tax?Investment 2: held 2 months: Whats the capital gains tax? MarriedRate on TaxableSingleTaxpayersIncomeТахраyersFiling JointlyHead of Households10%Up to $9,525Up to $19,050Up to $13,60012$9,525-$38,700$19,050-$77,400$13,600-$51,80022$38,700-$82,500$77,400-$165,000$51,800-$82,50024$82,500-$157,500 $165,000-$315,000$82,500-$157,50033$157,500-$200,000 $315,000-$400,000 $157,500-$200,00035$200,000-$500,000 $400,000-$600,000 $200,000-$500,00037$500,000+$600,000+$500,000+ Capital Gain Tax RateSingleMarried Filing Jointly0%Up to $38,60OUp to $77,20015%$38,600-$425,800$77,200-$479,00020%Over $425,800Over $469,000

Answered: Samuel Jenkins made two investments;…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Samuel Jenkins made two investments; the first was 13 months ago and the second was two months ago. He just sold both investments and has a capital gain of $10,000 on each. If Samuel is single and has taxable income of $40,000, what will be the amount of capital gains tax on each investment? See Capital Gains table and Taxable income rate table.

Investment 1: held 13 months: whats the capital gains tax?

Investment 2: held 2 months: Whats the capital gains tax?

Married
Rate on Taxable
Single
Taxpayers
Income
Тахраyers
Filing Jointly
Head of Households
10%
Up to $9,525
Up to $19,050
Up to $13,600
12
$9,525-$38,700
$19,050-$77,400
$13,600-$51,800
22
$38,700-$82,500
$77,400-$165,000
$51,800-$82,500
24
$82,500-$157,500 $165,000-$315,000
$82,500-$157,500
33
$157,500-$200,000 $315,000-$400,000 $157,500-$200,000
35
$200,000-$500,000 $400,000-$600,000 $200,000-$500,000
37
$500,000+
$600,000+
$500,000+

Capital Gain Tax Rate
Single
Married Filing Jointly
0%
Up to $38,60O
Up to $77,200
15%
$38,600-$425,800
$77,200-$479,000
20%
Over $425,800
Over $469,000

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

Investment 1 - made 13 months ago -

The tax rate for long-term capital gains for taxable income of $40,000 is 15%, so capital gain tax amount is : $10,000 x 15% = $1500

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