Assume thatJoe (single)has a marginal tax rate of 37 percent and decides to make the election to include preferentially taxed capital gains and qualified dividends as investment income. What rate must Joe use when calculating the tax on these two items?

Question

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When Joe decides to include preferentially taxed capital gains and qualified dividends as investment income, he must use his marginal tax rate of 37 percent to calculate the tax on these items, rather than the lower preferential rates that typically apply to such income.

Assume ThatJoe (Single)has a Marginal Tax Rate of 37 Percent