Ms. Beal recognized a $42,400 net long-term capital gain and a $33,000 net short-term capital loss this year. What is her current net tax cost from her capital transactions if her marginal rate on ordinary income is 35%?

Question

Quizplus · Accepted Answer

The net capital gain is $9,400 ($42,400 long-term gain - $33,000 short-term loss). The tax on this net gain is calculated at the long-term capital gains tax rate, which is typically lower than the ordinary income rate. Assuming a 15% long-term capital gains tax rate, the tax cost is $1,410 ($9,400 * 15%).

Ms Beal Recognized a $42,400 Net Long-Term Capital Gain and a $33,000