Jamie is single.In 2019, she reported $100,000 of taxable income, including a long-term capital gain of $5,000.What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the Tax rate schedules.)

Question

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Using the 2019 tax rate schedules, Jamie's taxable income of $100,000 puts her in the 24% tax bracket. Her tax liability before credits and deductions would be $14,975 (($84,200 x 0.22) + ($15,525 x 0.24) + ($100,000 - $84,200 - $15,525) x 0.24)). However, since she has a long-term capital gain, part of that gain is taxed at a lower rate. Since her taxable income puts her in the 24% tax bracket, but not over $434,550 (for single filers), her long-term capital gain is taxed at a 15% rate. Therefore, her tax on the capital gain would be $750 ($5,000 x 0.15). Adding her tax on the capital gain to her regular tax liability, her total gross tax liability would be $15,725 ($14,975 regular tax + $750 capital gains tax), rounded to the nearest whole dollar amount. The answer choice closest to this amount is C.

Jamie Is Single