Question

Henrich is a single taxpayer. In 2019, his taxable income is $458,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, Estates and Trusts for reference.

c. His $458,000 of taxable income includes $55,000 of long-term capital gain that is taxed at preferential rates.

Answer 1

c.)		Amount in $
	Taxable Income	458,000
	Less : Long term Capital gain taxable at 15% preferential rate	55,000
	Taxable Income for Slab rate	403,000
	Tax on Income at slab rate	116,244	(Working -1)
	Add: Tax on preferentially taxed	9,423	(Working -2)
	Income Tax	$ 125,666
	Net Investment Income tax laibility	$ 2,090	(55,000 x 3.8% )
	Total Income Tax & Net Investment Income Tax	$ 127,756	( 125,666 + 2,090 )
	Working-1
	Income tax as per Slab:2019
	Income	Rate of tax	Tax amount $	Working
	Upto 9,700	10%	970	(9,700 x 10% )
	9,701 to 39,475	12%	3,573	(39,475 - 9,700 ) x 12%
	39,476 to 84,200	22%	9,840	(84,200 - 39,475 ) x 22%
	84,201 to 160,725	24%	18,366	(160,725 - 84,200) x 24%
	160,726 to 204,100	32%	13,880	(204,100 - 160,725 ) x 32%
	204,101 to 510,300	35%	69,615	( 403,000 - 204,100 ) x 35%
	Income Tax		116,244
	Working-2
		Amount in $
	Total Income	458,000
	Less: Above the $434,550	434,550
	Taxable at the 20%	23,450
	Preferentially taxed income	55,000
	Less: Income taxable at the 20%	23,450
	Income taxable at the 15%	31,550
	Income taxable at the 20%	4,690	( 23,450 x 20% )
	Income taxable at the 15%	4,733	(31,550 x 15% )
	Tax on preferentially taxed income	9,423