Question

Henrich is a single taxpayer. In 2018, his taxable income is $454,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your answer to 2 decimal places. Leave no answer blank. Enter zero if applicable.)

b. His $454,000 of taxable income includes $2,000 of long-term capital gain that is taxed at preferential rates.

Income tax
Net investment income tax
Total tax liability $

c. His $454,000 of taxable income includes $47,000 of long-term capital gain that is taxed at preferential rates.

Income tax
Net investment income tax
Total tax liability $

d. Henrich has $197,000 of taxable income, which includes $50,800 of long-term capital gain that is taxed at preferential rates. Assume his modified AGI is $210,000.

Income tax
Net investment income tax
Total tax liability

Answer 1

Answer:
Part- b.
Normal Taxable income is $ 454,000 - $ 2,000 = $ 452,000
	Amount($)	Amount($)
Income tax
on $ 0 to $ 9,525 @ 10%	952.50
on $ 9,526 to $ 38,700 @ 12%	3,501.00
on $ 38,701 to $ 82,500 @ 22%	9,636.00
on $ 82,501 to $ 157,500 @ 24%	18,000.00
on $ 157,501 to $ 200,000 @ 32%	13,600.00
on $ 200,001 to $ 452,000 @ 35%	88,200.00	133,889.50
Long Term Capital Gain Tax @ 20% on $ 2,000		400.00
Net Investment Income Tax @ 3.8% on $2,000		76.00
Total Tax Liability		134,365.50
Part- c.
Normal Taxable income is $ 454,000 - $ 47,000 = $ 407,000
	Amount($)	Amount($)
Income tax
on $ 0 to $ 9,525 @ 10%	952.50
on $ 9,526 to $ 38,700 @ 12%	3,501.00
on $ 38,701 to $ 82,500 @ 22%	9,636.00
on $ 82,501 to $ 157,500 @ 24%	18,000.00
on $ 157,501 to $ 200,000 @ 32%	13,600.00
on $ 200,001 to $ 407,000 @ 35%	72,450.00	118,139.50
Long Term Capital Gain Tax @ 15% on $ 47,000		7050.00
Net Investment Income Tax @ 3.8% on $47,000		1,786.00
Total Tax Liability		126,975.50
Part- d.
Normal Taxable income is $ 197,000 - $ 50,800 = $ 146,200
	Amount($)	Amount($)
Income tax
on $ 0 to $ 9,525 @ 10%	952.50
on $ 9,526 to $ 38,700 @ 12%	3,501.00
on $ 38,701 to $ 82,500 @ 22%	9,636.00
on $ 82,501 to $ 146,200 @ 24%	15,288.00	29,377.50
Long Term Capital Gain Tax @ 15% on $ 50,800		7620.00
Net Investment Income Tax @ 3.8% on $10,000		380.00
Total Tax Liability		37,377.50
NOTE: The Net Investment Tax is levied on lower of Net Investment Income or Modified AGI exceeding $ 200,000 for single tax payer