Question

Mike and Diane Carter file jointly and have taxable income of $150,000 prior to considering capital gains. This year, they had the following property transactions:On April 1, sold, for $50,000, investment land which was inherited from their grandfather, was valued at $48,600 at his death during 2008, and was purchased in 2005 for $45,000.Sold 1,000 shares of stock at $15 each on May 16; the shares were purchased on April 24, 2018, at $12 each.Sold 300 shares of stock at $8 each on June 22; the shares were part of a 1,000 share lot purchased on January 11ththis year, at $10 each.Bought 500 shares of stock on August 31, 2001, for $12 each, which on December 31st this year, are worth $18 each. Ignoring commissions what is the tax consequence of the above transactions to the Carters?Group of answer choicesA. $1,178 increase in liability.B. $1,480 increase in liability.C. $570 increase in liability.D. $760 increase in liability.

Answer 1

Answer:

C. $570 increase in liability

Explanation:

     Particulars                       Amount

Land                                        $1,400          [50000-48600]

Long term capital gain         +$3,000          [1000 * (15-12)]

Short term capital loss          -$600            [300 * (8-10)]

Total Capital Gains                $3,800

Tax Rate                                   15%

Increase in liability                 $570              [$3,800 * 15%]