Question

Braden is in the 12% marginal tax bracket with a taxable income of $36,000 for the year. In addition, Braden has a $500 long-term capital gain on bonds he sold this year. If the $500 were taxed as ordinary income, Braden would remain in the 12% rate bracket. Since it is a long-term capital gain on security sales, Braden will pay tax of___________ $

Answer 1

Answer:

$0

$60

Explanation:

Based on the information give about Braden in which Barden is in the 12% marginal tax bracket that has a taxable income of $36,000 for the year as well as a $500 long-term capital gain on the bonds .

Hence, in a situation where the $500 were been taxed as his ordinary income this means that he would still remain in the 12% rate bracket because it is a long-term capital gain on the security sales.

Therefore Braden will pay tax of $0 on this income because Barden MARGINAL RATE DID NOT INCREASE ABOVE THE 12%.

And in a situation where the $500 gain was on collectibles and taxed at a maximum 28% this means that he would incur tax of $60 on this income calculated as :

(500*12%)=$60