Perry, a single taxpayer, has taxable income of $178,000 and is in the 32% tax bracket.During 2019, he had the following capital asset transactions: $\begin{array}{lr}
\text { Gain from the sale of a stamp collection (held for } 10 \text { years) } & \$ 30,000 \
\text { Gain from the sale of an investment in land (held for } 4 \text { years) } & 10,000 \
\text { Gain from the sale of stock investment (held for } 8 \text { months) } & 4,000
\end{array}$ Perry's tax consequences from these gains are as follows:

Question

Quizplus · Accepted Answer

The taxable gains from the capital asset transactions are as follows:

- Long-term gain from sale of stock: $10,000
- Short-term gain from sale of stock: $20,000
- Long-term gain from sale of rental property: $10,000
- Short-term gain from sale of rental property: $4,000

The gains are first classified as either long-term or short-term based on the holding period of the asset. Long-term gains are taxed at a lower rate than short-term gains.

Next, the gains are netted against any capital losses incurred during the year. In this case, there are no capital losses, so the entire gain is taxable.

Finally, the taxable gain is added to Perry's other taxable income to determine his tax bracket. Since Perry has taxable income of $178,000, he is in the 32% tax bracket.

Using this information, we can calculate Perry's tax consequences from the gains as follows:

- Long-term gain from sale of stock: (15% × $10,000) = $1,500
- Short-term gain from sale of stock: (28% × $20,000) = $5,600
- Long-term gain from sale of rental property: (15% × $10,000) = $1,500
- Short-term gain from sale of rental property: (32% × $4,000) = $1,280

Total tax consequences: $1,500 + $5,600 + $1,500 + $1,280 = $9,880

Therefore, the best choice is B, which matches the calculated tax consequences.

Perry, a Single Taxpayer, Has Taxable Income of $178,000 and Is