Sara is filing as head of household and has 2018 taxable income of $57,000, which includes $3,000 of net long-tem capital gain.The net long-term capital gain is made up of $1,000 25% gain and $2,000 0%/15%/20% gain.What is the tax on her taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.
A)$0
B)$6,978.
C)$6,868.
D)$6,838.
E)None of these.

Question

Quizplus · Accepted Answer

The alternative tax rate for net capital gain is 20%. The tax on the $3,000 net capital gain is $3,000 x 20% = $600. The tax on the remaining $54,000 of taxable income is $54,000 x 12% = $6,480. The total tax is $600 + $6,480 = $6,838.

Sara Is Filing as Head of Household and Has 2018