Pablo,a sole proprietor,sold stock held as an investment for a $40,000 long-term capital gain.Pablo's marginal tax rate is 33%.Loon Corporation,a C corporation,sold stock held as an investment for a $40,000 long-term capital gain.Loon's marginal tax rate is 35%.What tax rates are applicable to these capital gains?
A)15% rate applies to Pablo and 35% rate applies to Loon.
B)15% rate applies to Loon and 33% rate applies to Pablo.
C)35% rate applies to Loon and 33% rate applies to Pablo.
D)15% rate applies to both Pablo and Loon.
E)None of the above.

Question

Quizplus · Accepted Answer

For individuals like Pablo, long-term capital gains are taxed at a maximum rate of 15% if their marginal tax rate is 33%. For C corporations like Loon, long-term capital gains are taxed at the ordinary corporate tax rate, which is 35% in this case.

Pablo,a Sole Proprietor,sold Stock Held as an Investment for a $40,000