Question

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 $64,700. Meg works part-time at the same university. She earns $34,000 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).

a.

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	$	9,200
Short-term capital losses		(2,200)	)
Long-term capital gains		15,390
Long-term capital losses		(6,390)	)

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		10,500
Long-term capital losses		(10,200)	)

Answer 1

a)
Salary = $64700+ $34000	$98,700.00
Net short-term capital gain (9200 -2200)	$7,000.00
Net long-term capital gain (15390 - 6390)	$9,000.00
AGI	$114,700.00
Standard deduction	-$24,400.00
Taxable income	$90,300.00
Less preferentially taxed income	-$9,000.00
Net Taxable Income	$81,300.00
Tax Liability = (9086 + (81300 - 78950) x 22%	$9,603.00
Long term capital Gain = $9000 x 15%	$1,350.00
Tax Liability @2019	$10,953.00
Net capital gain may be taxed at 15% if you're in the 15% or 37% ordinary income tax brackets.
b)
Salary = $64700+ $34000	$98,700.00
Net short-term capital gain (1500 - 0)	$1,500.00
Net long-term capital gain (10500 - 10200)	$300.00
AGI	$100,500.00
Standard deduction	-$24,400.00
Taxable income	$76,100.00
Less preferentially taxed income	-$300.00
Net Taxable Income	$75,800.00
Tax Liability = $1940 + ($75800 - $19400) x 12%	$8,708.00
Long term capital Gain = $3190 x 0%	0
Tax Liability @2019	$8,708.00
Net capital gain may be taxed at 0% if you're in the 10% or 15% ordinary income tax brackets.