Question

Matt and Meg Comer are married. They do not have any children. Matt works as a history professor at a local university and earns a salary of $64,000. Meg works part-time at the same university. She earns $21,000 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). Assume they file a joint return. (Use the tax rate schedules.) (Round final answers to the nearest whole dollar amount.)

A. What is the Comers’ tax liability for 2017 if they report the following capital gains and losses for the year?

Short-term capital gains	$	9,000
Short-term capital losses		(2,000	)
Long-term capital gains		15,000
Long-term capital losses		(6,000	)
B. What is the Comers’ tax liability for 2017 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 13,000 Long-term capital losses (10,000 )

Answer 1

1
	Salary	$    85,000.00	[$64000+21000]
	Net Short TermCapital Gains	$      7,000.00	($9000-$2000)
	Net Long Term Capital Gains	$      9,000.00	($15000-$6000)
	AGI	$ 101,000.00
	Standard Deduction	$ (12,700.00)
	Personal Exemption	$    (8,100.00)
	Taxable Income	$    80,200.00
	Less: Preferable Taxed Income	$    (9,000.00)
	Taxable Ordinary Income	$    71,200.00
	Income taxed at ordinary rates
	[$1865+ (72000-18650)*.15]	$      9,747.50
	Then you gotta add the 9000 back and the amount that would put the couple into the next tax bracket needs to be taxed at 15% so
	80200-75900 = 4300 that needs to be taxed at 15%
	= 9748+4300*.15 = $10393
2
	Salary	$    85,000.00	[$64000+21000]
	Net Short TermCapital Gains	$      1,500.00
	Net Long Term Capital Gains	$      3,000.00	[13000-10000)
	AGI	$    89,500.00
	Standard Deduction	$ (12,700.00)
	Personal Exemption	$    (8,100.00)
	Taxable Income	$    68,700.00
	Less: Preferable Taxed Income	$    (3,000.00)
	Taxable Ordinary Income	$    65,700.00
	Income taxed at ordinary rates
	[$1865+ (65700-18650)*.15]	$      8,922.50
	Then we add 3000 back and the amount would not put the couple into the next tax bracket.
	Therefore Income Taxed at special rates	0
	[$9000*0%]
	Total Tax liability	$      8,922.50