Maya expects to report about $2 million of AGI and $1.7 million of taxable income.Her AGI is composed of $1.25 million of salary,and the balance is investment income.Maya is thinking about selling some stock before year-end.She purchased the stock three years ago and expects to recognize a $500,000 gain.How much federal tax will she pay in total on the stock gain?
A)$119,000
B)$100,000
C)$75,000
D)$185,000

Question

Quizplus · Accepted Answer

The correct answer is A.Maya's taxable income is $1.7 million. Her AGI is $2 million, which includes $1.25 million of salary and $750,000 of investment income. If she sells the stock, she will recognize a $500,000 gain, which will increase her taxable income to $2.2 million. Her federal tax liability on the stock gain will be $119,000.

Maya Expects to Report About $2 Million of AGI and $1.7