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Eliot will use filing status as single. His MAGI of $245,000 includes $25000 of capital gains....

Eliot will use filing status as single. His MAGI of $245,000 includes $25000 of capital gains. He has no other investment income. Eliot will calculate his net investment income tax on: a. $0, B. @25000, C. $45000, or D. $245000?

Solutions

Expert Solution

B) $ 25,000 is the correct alternative.

Explanation : The net investment income tax is applied to the lesser of the net investment income or the MAGI amount in excess of the predetermined limit.

Here, the net investment income = $ 25,000

MAGI = $ 245,000

Predetermined limit (Threshold for single tax filers) = $ 200,000

MAGI in excess of the predetermined limit = $ 245,000 - 200,000 = $ 45,000

Net investment income ($ 25,000) is lesser than "MAGI lesser than predetermined limit" ( $ 45,000). So, Eliot will calculate net investment income tax on $ 25,000.

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ekkarill92 answered 2 years ago
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