Tom sold mutual fund shares, which he had owned for 3 years, so that he could use the proceeds to return to college. Tom is in the 12% marginal tax bracket, and his capital gain from the sale was $12,000. How much tax does Tom owe on the gain?

Question

Quizplus · Accepted Answer

Since Tom is in the 12% marginal tax bracket and the gain is a long-term capital gain (assets held for more than a year), the tax rate on long-term capital gains for individuals in the 10% or 12% income tax brackets is 0%. Therefore, Tom owes $0 in taxes on the gain.

Tom Sold Mutual Fund Shares, Which He Had Owned for 3