Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gains from the sale were $40,000. Melinda's tax liability on the gain is:

Question

Quizplus · Accepted Answer

Since Melinda held the mutual fund shares for more than a year, the gain is considered a long-term capital gain. For someone in the 32% tax bracket, the long-term capital gains tax rate is typically 15%. Therefore, her tax liability on the $40,000 gain would be 15% of $40,000, which is $6,000.

Melinda Sold Mutual Fund Shares, Which She Had Owned for 5