Question

During the current year, Ron and Anne sold the following assets:

Capital Asset	Market Value	Tax Basis	Holding Period
L stock	$50,000	$41,000	> 1 year
M stock	28,000	39,000	> 1 year
N stock	30,000	22,000	< 1 year
O stock	26,000	33,000	< 1 year
Antiques	7,000	4,000	> 1 year
Rental home	300,000*	90,000	> 1 year

$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property)

Ignore the Net Investment Income Tax.

Given that Ron and Anne have a taxable income of $400,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2016 assuming they file a joint return?

Answer 1

		Amount $
Capital Asset	Market Value	Tax Basis	Holding Period	type of gain	Amount of Gain	Less Depreciation	Adjusted Amount of Gain	Revenue Gain	Capital Gain
L stock	50,000.00	41,000.00	> 1 year	capital gain	9,000.00		9,000.00		9,000.00
M stock	28,000.00	39,000.00	> 1 year	capital gain	-11,000.00		-11,000.00		-11,000.00
N stock	30,000.00	22,000.00	< 1 year	revenue gain	8,000.00		8,000.00	8,000.00
O stock	26,000.00	33,000.00	< 1 year	revenue gain	-7,000.00		-7,000.00	-7,000.00
Antiques	7,000.00	4,000.00	> 1 year	capital gain	3,000.00		3,000.00		3,000.00
Rental home	3,00,000.00	90,000.00	> 1 year	capital gain	2,10,000.00	30000.00	1,80,000.00		1,80,000.00
Total		2,29,000.00			2,12,000.00	30,000.00	1,82,000.00	1,000.00	1,81,000.00
	Taxable Ordinary Income	4,00,000.00
Add:	Revenue Gain	1,000.00
	Total Ordinary Income for Tax Liability	4,01,000.00
	Taxable income for Capital Gain Tax	1,81,000.00