What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting from short-term capital gains and $800 resulting from long-term capital gains assuming a 30% tax bracket and a 10% capital gains rate?

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Quizplus · Accepted Answer

Short-term capital gains are taxed at the ordinary income tax rate, which is 30% in this scenario. Therefore, the tax on the $600 from short-term gains would be $600 * 30% = $180. Long-term capital gains are taxed at a lower rate, which is 10% here, so the tax on the $800 from long-term gains would be $800 * 10% = $80. Adding these together, the total tax consequence would be $180 + $80 = $260.

What Would Be the Tax Consequence of Owning a Mutual