Question

In 2020, Tom and Amanda Jackson (married filing jointly) have $228,000 of taxable income before considering the following events: (Use the dividends and capital gains tax rates and tax rate schedules.)

1. On May 12, 2020, they sold a painting (art) for $113,500 that was inherited from Grandma on July 23, 2018. The fair market value on the date of Grandma’s death was $91,750 and Grandma’s adjusted basis of the painting was $25,700.
2. They applied a long-term capital loss carryover from 2019 of $10,350.
3. They recognized a $12,175 loss on the 11/1/2020 sale of bonds (acquired on 5/12/2010).
4. They recognized a $4,210 gain on the 12/12/2020 sale of IBM stock (acquired on 2/5/2020).
5. They recognized a $17,840 gain on the 10/17/2020 sale of rental property (the only §1231 transaction), of which $8,560 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,280 is subject to the 0/15/20 percent maximum rates (the property was acquired on 8/2/2014).
6. They recognized a $12,350 loss on the 12/20/2020 sale of bonds (acquired on 1/18/2020).
7. They recognized a $7,175 gain on the 6/27/2020 sale of BH stock (acquired on 7/30/2011).
8. They recognized an $11,350 loss on the 6/13/2020 sale of QuikCo stock (acquired on 3/20/2013).
9. They received $640 of qualified dividends on 7/15/2020.
   
   After completing the required capital gains netting procedures, what will be the Jacksons’ 2020 tax liability? (Do not round intermediate calculations.)

Answer 1

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