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 income tax cost from her capital transactions if her marginal rate on ordinary income is 39.6%?

Question

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The net capital gain is $9,400 ($42,400 long-term gain - $33,000 short-term loss). Long-term capital gains are taxed at a lower rate than ordinary income. Assuming a 20% tax rate on long-term capital gains, the tax cost is $1,880 ($9,400 * 20%).

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