Sara is filing as head of household and has 2015 taxable income of $57,000 which includes $3,000 of net long-tem capital gain.The net long-term capital gain is made up of $1,000 25% gain and $2,000 0%/15%/20% gain.What is the tax on her taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table.
A)$0
B)$8,573
C)$8,273
D)$8,373
E)None of the above

Question

Quizplus · Accepted Answer

The tax on ordinary income ($54,000) is calculated using the head of household tax rate schedule. The $2,000 0%/15%/20% gain is taxed at 15% since Sara's income falls within the 15% capital gains bracket. The $1,000 25% gain is taxed at 25%. The total tax is $8,373.

Sara Is Filing as Head of Household and Has 2015