Bridget, a single taxpayer, sold a building used in her business during the current year. The realized gain on the sale was $135
,000. Of this amount, $95,000 is unrecaptured Section 1250 gain. How will Bridget be taxed on this gain assuming her marginal tax rate is 32 percent and her LTCG rate is 15%?
1 answer:
Answer:
$95,000 will be taxed at 25% and $40,000 will be taxed at 15%
Explanation:
(See attachment below for Long-term capital gains tax rate)
Depending on income and marital status, the long-term capital gains tax rates are 0%, 15% and 20% respectively.
Bridget is single and her realised gain is $135,000
Out of which $95,000 is unrecaptured Section 1250 gain.
The capital gain attracts 15%
(See attachment below)
The capital gain is calculated as
$135,000 - $95,000 = $40,000
The $95,000 will be taxed at 25% under the unrecaptured Section 1250 gain.
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