Andrew and Jennifer are in the 22% marginal tax bracket. Three years ago they purchased 100 shares of stock at $20 a share. In 2018, they sold the 100 shares for $29 a share. What is the amount of federal income tax they owe as a result of this sale?
A) $135
B) $165
C) $225
D) $435

Question

Quizplus · Accepted Answer

The capital gain on the sale is calculated as (selling price - purchase price) * number of shares = ($29 - $20) * 100 = $900. Since they are in the 22% marginal tax bracket, the tax owed on this capital gain is $900 * 15% (the long-term capital gains tax rate for their bracket) = $135.

Andrew and Jennifer Are in the 22% Marginal Tax Bracket