Matt and Meg Comer are married and file a joint tax return. They do not have...

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 $64,950. Meg works part-time at the same university. She earns $34,250 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.) (Round your final answers to the nearest whole dollar amount.)

a. What is the Comers’ tax liability for 2019 if they report the following capital gains and losses for the year?


Short-term capital gains	$	9,250
Short-term capital losses		(2,250	)
Long-term capital gains		15,490
Long-term capital losses		(6,490	)

b. What is the Comers’ tax liability for 2019 if they report the following capital gains and losses for the year?


Short-term capital gains	$	1,500
Short-term capital losses		0
Long-term capital gains		9,500
Long-term capital losses		(9,450	)

Solutions

Expert Solution

Part A

Salary (64950+34250)	99200
Net short term capital gain (short term capital gain – short term capital loss = 9250-2250 )	7000
Net long term capital gain (long term capital gain – long term capital loss = 15490-6490	9000
AGI	115200
Standard deduction (For MFJ 2018)	(24400)
Taxable income	90800
Qualified LTCG (preferentially taxed income)	(9000)
Income taxed at ordinary rates	81800
Ordinary Taxes	9713 (9086+(22%*(81800-78950)))
Preferential tax	1350 (9000*15% as taxable income is above the limit of $78750)
Total tax liability	$11063 (ordinary taxes + preferential taxes)

Part B

Salary (64950+34250)	99200
Net short term capital gain (short term capital gain – short term capital loss = 1500-0 )	1500
Net long term capital gain (long term capital gain – long term capital loss = 9500-9450)	50
AGI	100750
Standard deduction (For MFJ 2018)	(24400)
Taxable income	76350
Qualified LTCG (preferentially taxed income)	(50)
Income taxed at ordinary rates	76300
Ordinary Taxes	8768 (1940+(12%*(76300-19400)))
Preferential tax	0 (50*0% as taxable income is below the limit of $78750)
Total tax liability	$8768 (ordinary taxes + preferential taxes)

ekkarill92 answered 3 months ago

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