Question

Assume that Joe (single) has a marginal tax rate of 37 percent and decides to make the election to include preferentially taxed capital gains and qualified dividends as investment income. What rate must Joe use when calculating the tax on these two items?

Answer 1

Answer:

37 percent

Explanation:

Joe is a single unmarried person.

He has a single marginal tax rate of 37 percent and he decides to make the election to include preferentially taxed capital gains and qualified dividends as investment income.

Now we know that the investment is considered to be an ordinary income that Joe is investing.

The tax is to be paid as per normal tax rates.

Therefore the investment is to be taxed at the marginal rate that is 37 percent.

Thus the answer is 37 percent.