Question

Sally is single and has taxable income of $170,000 as of November 30 of this year. She wants to sell a Rodin sculpture that has appreciated $90,000 since she purchased it six years ago, but she does not want to pay more than $15,000 of additional tax on the transaction. Sally also owns various stocks, some of which are currently worth less than their basis. a. How will the gain on sale of the Rodin sculpture be taxed

Answer 1

Answer: See explanation

Explanation:

The long term gain is being subjected to 28% tax rate, and since the maximum tax liability that she wants to pay is $15000, therefore, the maximum net capital gain will then be:

= $15000/28%

= $15000 / 0.28

= $53571