Question
In: Accounting
Chris and Donna are in the 37% tax bracket for ordinary income and the 20% bracket...
Chris and Donna are in the 37% tax bracket for ordinary income and the 20% bracket for capital gains (ignore the 3.8% additional tax on investment income for higher-income taxpayers.) They have owned several blocks of stock for many years. They are considering the sale of two blocks of stock. The sale of one block would produce a gain of $11,000. The sale of the other would produce a loss of $18,000. For purposes of this problem, ignore any restrictions on deductions or credits based on AGI. They have no other gains or losses this year.
a. How much tax will they save if they sell the block of stock that produces a loss?
b. How much additional tax will they pay if they sell the block of stock that produces a gain?
c. What will be the impact on their taxes if they sell both blocks of stock?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Omar, an individual in the 37% tax bracket, wants to shift some of his income to...
Omar, an individual in the 37% tax bracket, wants to shift some
of his income to a new corporation in order to take advantage of
the 21% corporate tax rate. Omar plans to avoid any tax on
dividends by retaining all earnings within the corporation. Will
Omar's plan work?
Omar's ability to achieve tax savings by shifting income to a
corporation may be limited by __________ . Omar could be subject to
a_______ % penalty tax on ______ the corporation.
Charlie, who is in the 37 percent marginal tax bracket, is the president and sole owner...
Charlie, who is in the 37 percent marginal tax bracket, is the
president and sole owner of Charlie Corporation (a C corporation in
the 21 percent tax bracket). His current salary is $700,000 per
year. Whar are the income and FICA tax consequences if the IRS
determines that $200,000 of his salary is unreasonable
compensation?
Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president...
Ms. Xie, who is in the 37 percent tax bracket, is the sole
shareholder and president of Xenon. The corporation’s financial
records show the following:
Gross income from sales of goods
$
1,590,000
Operating expenses
(930,000
)
Salary paid to Ms. Xie
(300,000
)
Dividend distributions
(200,000
)
Compute the combined tax cost for Xenon and Ms. Xie. (Ignore
payroll tax.)
How would your computation change if Ms. Xie’s salary was
$500,000 and Xenon paid no dividends?
Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...
Mr. Lion, who is in the 37 percent tax bracket, is the sole
shareholder of Toto,Inc., which manufactures greeting cards. Toto’s
average annual net profit (before deduction of Mr. Lion’s salary)
is $360,000. For each of the following cases, compute the income
tax burden on this profit. (Ignore any payroll tax
consequences.)
a. Mr. Lion’s salary is $100,000, and Toto pays no
dividends.
b. Mr. Lion’s salary is $100,000, and Toto distributes its
after-tax income as a dividend.
c. Toto...
Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...
Mr. Lion, who is in the 37 percent tax bracket, is the sole
shareholder of Toto,Inc., which manufactures greeting cards. Toto’s
average annual net profit (before deduction of Mr. Lion’s salary)
is $290,000. For each of the following cases, compute the income
tax burden on this profit. (Ignore any payroll tax
consequences.)
A) Mr. Lion’s salary is $100,000, and Toto pays no
dividends.
B)Mr. Lion’s salary is $100,000, and Toto distributes its
after-tax income as a dividend.
C) Toto is...
Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...
Mr. Lion, who is in the 37 percent tax bracket, is the sole
shareholder of Toto,Inc., which manufactures greeting cards. Toto’s
average annual net profit (before deduction of Mr. Lion’s salary)
is $200,000. For each of the following cases, compute the income
tax burden on this profit. (Ignore any payroll tax
consequences.)
a. Mr. Lion’s salary is $100,000, and Toto pays no
dividends.
b. Mr. Lion’s salary is $100,000, and Toto distributes its
after-tax income as a dividend. Toto is...
(2012 tax bracket) A. using the table, what is the total federal income tax bill for...
(2012 tax bracket)
A. using the table, what is the total federal income tax bill
for someone who makes $67,000 per year? (show calculations)
B. using the table, what is the average tax rate for someone who
makes $67,000 per year? (show calculations)
One of your friends, who is in 20% marginal tax bracket, is planning to buy a...
One of your friends, who is in 20% marginal tax bracket, is
planning to buy a condo selling for $140,000. Your friend’s plan is
to make a down payment of 20% and finance the balance from a bank
at a fixed rate of 4.99% over 30 years with monthly payments. He
needs your help in figuring out his first year tax savings if he
decides to buy this home.
A. $3,219
B. $1,575
C. $5,551
D. $1,441
Question 10.1 (1 point) Suppose that the distribution of income in a certain tax bracket is...
Question 10.1 (1 point) Suppose that the distribution of income
in a certain tax bracket is approximately normal with a mean of
$53,183.88 and a standard deviation of $1,799.608. Approximately
18.56% of households had an income greater than what dollar amount?
Question 11 options: 1) We do not have enough information to
calculate the value. 2) 54,793.14 3) 51,574.62 4) 2,842,851 5)
2,949,219 Question 12 (1 point) According to a survey conducted by
Deloitte in 2017, 0.4609 of U.S. smartphone...
Assume Ghana operates a 5-bracket annual income tax system that attracts tax rates of 0% for...
Assume Ghana operates a 5-bracket annual income tax system that
attracts tax rates of 0% for the first GHS 3828, 5% for the next
GHS 1200, 10% for the next GHS 1440, 17.5% for the next GHS 36000,
and 25% for any remaining amount. Mr. Mustapha makes GHS 90,000 per
year, and has a wife and 2 children. The Government gives a tax
exemption/deduction of GHS1500 per family member. Find the
following i. Statutory marginal tax rate ii. Effective
marginal...
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