Question

Jamie is single. In 2020, she reported $108,000 of taxable income, including a long-term capital gain of $5,800. What is her gross tax liability? (Round your answer to the nearest whole dollar amount.) (Use the tax rate schedules, long-term capital gains tax brackets.)
a. $19.478
b. $20143
c. $18,728
d. 516 200

Answer 1

Answer:

$19,478

Explanation:

Computation of tax liability

i. Total income excluding LTC gain = 108,000 - 5,800 = 102,200

ii. Tax on 102,200 as per single tax schedule = 14605.5+((102200-85525)*24%) = 18607.50

iii. Tax on LTC gain at 15% = 5800 * 15% = 870

So, Gross Tax liability = $18607.50 + $870 = $19477.50 = $19,478

Note: As per Long term capital gain schedule